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Michigan State University College of Law Investor Advocacy Clinic Supports FINRA CARDS Proposal

On March 21, 2014, the MSU Investor Advocacy Clinic filed a comment letter in response to a regulatory notice from the Financial Industry Regulatory Authority (FINRA).  The Clinic supports FINRA’s Comprehensive Automated Risk Data System (CARDS) Proposal which seeks to increase investor protection and FINRA enforcement effectiveness by continuously analyzing data about securities transactions.

The Clinic supports the CARDS Proposal because the potential benefits outweigh the costs and risks.  As to the benefits, the Clinic’s letter highlights the proposed system’s likely ability to identify problems early so that FINRA enforcement may stop misconduct before more investors receive unsuitable recommendations.  The Clinic also believes the cost and privacy fears raised by opponents are overstated.  Properly measured, costs incurred to create the system should be weighed against the losses likely averted by improved oversight.  Moreover, FINRA recently clarified that the proposed system would not collect personally identifying information about individual investors, reducing the scope of privacy risks from possible data breaches.   

Investor Advocacy Clinic student clinicians Casey Gonyea and Michala Welch were responsible for researching and drafting the comment letter.  A copy of the letter is available here.


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