As part of the Dodd-Frank Act, Congress directed the SEC to review whether a so-called “self-regulatory organization” (or “SRO”) should be created to regulate investment advisers. Doing so would make investment adviser regulation more akin to the way broker-dealers are regulated.
Under securities laws, broker-dealers must register with the SEC by filing Form BD. But Form BD is a relatively minor step in the process of registering a broker-dealer, because broker-dealers are also required to become a member of the Financial Industry Regulatory Authority (“FINRA”). The membership application for FINRA is the most time-consuming step in creating a new broker-dealer. After a broker-dealer is registered, FINRA also takes the primary role in regulating the activities of the broker-dealer.