Tags: FINRA | sec

Leading pro-business group the U.S. Chamber of Commerce is fine with the idea of financial regulatory reform -- but says Dodd-Frank doesn't go nearly far enough to make real change.

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Given the political rhetoric out there that the Dodd-Frank Act is bad for business, the Chamber's new report, "The Unfinished Agenda," throws a few unexpected hand grenades.

On the one hand, they want fundamental changes in the U.S. regulatory environment, arguing that "it is critically important to reevaluate the form and substance of U.S. financial services regulation."

But, they say, Dodd-Frank failed to provide that, not because it went too far but because it was only a massive but superficial patch on an ailing system.

"The Dodd-Frank Act should never be confused with sweeping regulatory reform. Rather, it layered more process, people, and prohibitions on the cracked and crumbling 75-year-old regulatory foundation."

Real reform, the Chamber says, would extend high-tech methods to the regulators to speed up the rate at which U.S. securities firms can process transactions while catching and correcting mistakes.

Faster supervision and faster resolutions would deter copycat criminals while helping U.S. firms compete in a global market.

The SEC needs to streamline its org chart and not add new offices to keep up with reform, the report continues. Too many mandates and too many department heads have created an environment where regulators are forced to weigh conflicting priorities and take short cuts -- like paid whistleblower programs -- to keep up with events.

And FINRA is, the Chamber concludes, part of the problem. 

As a non-governmental body with quasi-governmental powers, FINRA needs to be brought into a system of checks and balances to ensure that it is transparent and accountable to its members.

In fact, the Chamber calls FINRA's disclosure of how it runs -- and pays its people -- "extremely limited and superficial."

In the face of efforts in Washington to hand more power to FINRA, this rebuke should sting.

Charles Schwab reported decent bottom line numbers yesterday, but drilling down into the revenue and asset mix reveals that the second quarter was kind of slow for the massive discount brokerage and custody firm.

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While Schwab boosted its overall client assets 22% to a whopping $1.6 trillion in the quarter, its profit growth lagged significantly, up only 17%.

The root of the problem: while more investors were parking their money on the Schwab platform, fewer were trading. In terms of account activity, last May was 23% worse for the firm than it was in the previous year, while April and June were flat at best.

In all, trading revenue sank 12% on an annualized basis and 14% quarter over quarter.

They did manage to capture about 80,000 new brokerage accounts, but lost 28,000 retirement plan participants.

And on the advisory side -- the firm's crowning glory, to some analysts -- new assets were hard for affiliated RIAs to come by. Overall advisory AUM surged a healthy 17% year over year, but only edged up 1% from the first quarter.

New advisory assets are still up 4% over last year, but down a disturbing 25% over last quarter. 

Tags: Morgan Stanley

Reports that Morgan Stanley is gearing up to cut "several thousand" jobs may have been a little too quick to interpret the giant firm's contingency planning as a done deal.

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Morgan is definitely trimming about 300 underperforming reps -- largely younger ones -- from its sales force this quarter.

But speculation about much deeper cuts seems to be jumping the gun a bit.

Morgan's Marie Claire Delaney debunks the idea of broad-based layoffs as simply not on the table right now.

She says the firm is always weighing its payrolls to ensure that it's "right sized," but it's a long way from evaluating scenarios to signing pink slips.

Still, the very notion that Morgan is open to the idea as part of its strategic planning might be where the speculation originally started.

The reporter who broke the story quoted an anonymous source within Morgan. Maybe the discussion got garbled along the way?

http://www.foxbusiness.com/markets/2011/07/13/morgan-stanley-could-be-next-wall-street-giant-to-cut-staff/

http://www.reuters.com/article/2011/07/13/morganstanley-layoffs-idUSN1E76C1W920110713

Tags: Schwab

Charles Schwab has apparently gotten about 300 inquiries but no firm sign-ups yet from established RIAs curious about its controversial new franchised advisory office network.

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Part of the problem might be that while Schwab is offering established advisors the weight of its national brand -- and matching funds for local advertising and outreach -- the recruiting message is a bit confused.

Schwab nominally wants to court "experienced financial professionals" who already have their own books of business.

Great so far, but the company's new recruiting site keeps referring to the franchised branches as an advisor's "new" business stocked with existing Schwab clients to tide advisors over in what the company explicitly calls "the early years."

Which is it?

Even Chuck Schwab's exclusive video commercial on the site seems a little tone-deaf.

There's plenty of talk about how great this could be for Schwab and how eager Schwab clients are to get more face-to-face time, but not much left for the advisors he's theoretically wooing to the brand.

As they say, "We're building on our history of innovation by creating a franchise opportunity, accelerating our expansion into communities like yours." 

A lot about Schwab and how fast it's expanding. But if anything, this is more of a threat: we're coming to our town, so join up.