"FINRA" gives a deceptive sense of the regulator's actual area of oversight. The Financial Planning Association hates the new name the NASD is proposing to give itself. In a nutshell, the Denver-based association thinks "Financial Industry Regulatory Authority" -- FINRA for short -- is inaccurate and misleading.

Nominally "NASD" stands for "National Association of Securities Dealers." In fact the private-sector securities regulator has been going with NASD as a stand-alone name for the better part of decade. Last week it said it was giving up on plans to re-name itself as the "Securities Industry Regulatory Authority" (SIRA) in favor of the FINRA moniker.

The NASD says a new name of some sort is necessary in light of its impending merger with the New York Stock Exchange 's enforcement divisions.

Lives of the Prophet

On the NASD's website there's a memo from the organization's chairman and CEO Mary Schapiro explaining its change of heart over the name SIRA.

"The name that was initially chosen for the new entity was the 'Securities Industry Regulatory Authority,' or SIRA," Schapiro writes. "However, after we previewed the name three weeks ago, we were made aware that our use of the acronym 'SIRA' could create confusion, or might even be considered offensive by some, because of its similarity to an Arabic term used to refer to the traditional biographies of Muhammad. Because of this feedback, we determined that it was appropriate to select the alternative name of 'Financial Industry Regulatory Authority,' or FINRA, for our new organization."

The NASD "has a longstanding historical mandate to regulate broker-dealers and the organization's merger with the New York Stock Exchange doesn't change that core mission," says FPA president Nicholas Nicolette. "The 'financial industry' tagline for a regulator would appear to be a seal of good housekeeping that protects the public in areas of the financial service sector where the NASD has no oversight authority."

Sticks in the mind

Among parts of the financial-service industry over which the NASD has no authority are mortgage companies, banks, credit unions, trust companies, insurance providers, investment advisors, mutual-fund companies and, says the FPA, the financial-planning profession.

It would take an act of Congress to expand the NASD's regulatory authority to take in these areas of the financial-service industry, according to the FPA.

Nicolette says that in face of the NASD's refusal to "embrace a fiduciary standard for its own regulated community" it would be inappropriate for it "to adopt a misleading title for an organization that implies broader oversight authority of the new self-regulatory organization."

The bit about the NASD's reluctance to "embrace a fiduciary standard" is a reference to the NASD's support of the Securities and Exchange Commission's attempt -- recently negated in court -- to exempt brokerages from the rules that govern RIAs when they provide advice for fees rather than commissions.

But the NASD's Shaprio thinks that "FINRA describes well the full scope of our responsibilities, clearly defines the new organization's mission and is easy to remember."

The FPA has about 28,000 members. -FWR

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