The ever escalating cost to financial market participants from increased regulatory reporting and supervisory examinations stemming from the Dodd-Frank Wall Street Reform and Consumer Protection Act to enhanced regulatory regimes from the Federal Reserve, the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) is a major factor in current market consolidation and the closure of firms across the country. In particular, the nation’s broker-dealers have experienced the overwhelming impact of these pressures.
FINRA reports that the number of registered broker-dealers has dropped by 11 percent over the past five years, from 5,005 in 2007 to 4,140 in April 2014.1 For lawyers counseling broker-dealers, however, advising them on whether to remain independent or merge with a larger player to gain critical mass in the wake of enhanced regulatory regimes is only part of the issue.
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