FINRA survey finds that retail traders want even more regulatory protection

Congruent with the United States’ well recognized reputation for keen consumer protection legislation, The Financial Industry Regulatory Authority (FINRA) has released a survey of U.S. investors designed to measure perceptions of fairness and to gauge demand for additional regulatory protections.

FINRA’s survey of 1,000 adults revealed that 92 percent of investors agreed (62 percent strongly agreed and 30 percent somewhat agreed) that it is important to have a regulatory “cop on the beat” to protect investors and police the markets. In addition, 70 percent of investors surveyed strongly agreed and 24 percent of investors somewhat agreed that it is important that regulators use the latest tools and technology to protect investors.

In accordance with this, LeapRate reported yesterday that Commodity Futures Trading Commission (CFTC) Chairman Timothy Massad has voiced concerns that the organization which he oversees has experienced funding constraints when working on methods of keeping pace with technological requirements in order to provide consumer protection relating to modern methods which brokerages, exchanges and clearing houses use, as well as the electronic threats that they are faced with from destructive sources such as hackers.

Overall, investors surveyed by FINRA strongly agreed that regulation and investor protections are important.

Highlights include:

88 percent of investors believe it’s moderately or very important for regulators to detect when unsuitable securities are being sold to investors.

90 percent believe it’s moderately or very important for regulators to detect when brokers are making trades that benefit themselves and not the investor.

89 percent believe it’s moderately or very important for regulators to detect when firms are taking risks that potentially harm their investors and the financial system.

Nearly three quarters of investors surveyed (74 percent) would support additional regulatory protections to safeguard them from misconduct by brokers or brokerage firms. Support was strong across age groups and investment levels. In addition, only one in five of those surveyed (22 percent) expressed opposition to additional protections if it meant a minimal increase in the costs that brokerage firms passed on to them. By comparison, 56 percent of those surveyed expressed support for additional protections even if it meant a minimal increase in their costs.


While FINRA has previously surveyed investors regarding “investor literacy”–the understanding ordinary investors have of market principles, instruments, organizations and regulation–the survey FINRA released today is designed to assess investor attitudes regarding regulatory protections.

FINRA’s Investor Survey was conducted between October 7 and October 9, 2014, as well as between October 27 and October 29, 2014. Survey respondents were recruited from a nationally distributed online panel and were screened to meet the following criteria: U.S. adults ages 21 or older, having primary or shared responsibility in their household for investment decisions. Although the cut-off for inclusion was at least $10,000 in securities investments, not exclusively in tax-deferred retirement accounts, more than 70 percent had investments over $100,000.

In order to view comprehensive data from FINRA’s survey, click here.

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