Wasted Time By FINRA Regulatory Notice

July 12, 2021

FINRA's lackluster Board of Governors demonstrates no interest in prompting a more aggressive and effective regulatory protocol. By design or default, FINRA's Board is socially engineering an industry dominated by fewer, large firms and endangered by too many shady, smaller ones. It is the worst of both worlds where power is unchecked and fraud tolerated. Instead of formulating an effective regulatory agenda that combines more timely retroactive enforcement with proactive antifraud efforts, FINRA persists in offering a simulacrum of regulation. Among FINRA's worst sins is that it is an organization for which everything, no matter how inconsequential or half-assed, prompts a press release or formal notice. Worse, the endless stream of useless communications are routed to compliance professionals, whose time is wasted by being forced to read about nothing of value. Consider this recent, important sounding nonsense: 


Under the "Summary" portion of Regulatory Notice 21-25, we are offered this synopsis:

For the past several years, FINRA has encouraged firms to keep their risk monitoring analyst informed if the firm, or its associated persons or affiliates, engaged, or intended to engage, in activities related to digital assets, including digital assets that are non-securities.1 FINRA appreciates members' cooperation with this request and is encouraging firms to continue to keep their risk monitoring analyst abreast of their activities related to digital assets on an ongoing basis.
= = = = =
Endnote 1: See Regulatory Notices 18-20 (July 2018), 19-24 (July 2019) and 20-23 (July 2020).

I want to ask you to read and then re-read that "Summary" and then tell me why FINRA  issued Regulatory Notice 21-25 on July 8, 2021? What was the point?  What was the urgency?

In the first sentence of the Notice,  we learn that for several years, FINRA has been encouraging its member firms to "keep their risk monitoring analyst informed" about something to do with what is called "digital assets." Wow!  Now that's as asinine a bit of regulation as one could imagine. FINRA's approach to regulation is laughable because it is so insipid. If you want to put the time into reading the crapola that's FINRA Regulatory Notice 21-25, knock yourself out. What I would ask you to take notice of is such vapid prose as this:

  • Since 2018, FINRA has sought to engage in an ongoing dialogue with member firms regarding their current and planned activities relating to digital assets.
  • FINRA greatly appreciates the ongoing cooperation and outreach from firms over the past two years on this important topic.  
  • As the area of digital assets continues to evolve and present unique regulatory challenges, FINRA believes it is important to keep the lines of communication with members open. 
So . . . I ask again: What was so important and so pressing as to prompt the issuance of FINRA Regulatory Notice 21-25 on July 8, 2021? When you're done with your own inquiry and you've outlined all the points in favor of FINRA's publication of Regulatory Notice 21-25, I want you to go back to Endnote 1. Consider this litany of similar regulatory notices spanning over four years:





Ah yes, I can almost write the headline for FINRA's July 2022 Regulatory Notice:

FINRA Continues to Continue to Encourage Firms to Continue to Notify FINRA if They Continue to Engage in Activities Related to Digital Assets