U.S. Financial Services Committee’s Capital Markets Subcommittee probes FINRA and MSRB transparency and governance including MSRB Reform Act proposal

The U.S. Financial Services Committee’s Subcommittee on Capital Markets held a hearing examining the accountability, efficiency, and transparency of U.S. self-regulatory organizations, with a focus on the Financial Industry Regulatory Authority and the Municipal Securities Rulemaking Board. Members highlighted concerns about enforcement practices, the level of public-law transparency and oversight applied to FINRA, and whether the current self-regulatory model remains fit for modern markets. The discussion covered claims that SRO enforcement can feel punitive rather than corrective for smaller broker-dealers and municipal advisors, and that FINRA exercises broad regulatory powers without being subject to the Administrative Procedures Act, the Freedom of Information Act, or direct congressional appropriations. Lawmakers also raised governance questions about the MSRB’s allocation of resources between rulemaking and technology development, and noted that the MSRB Reform Act would revisit the Dodd-Frank requirement for a public-member majority on the MSRB board. Witnesses proposed targeted changes, including expanding BrokerCheck disclosures to cover disciplinary history across a broader set of financial professionals, addressing due process concerns by introducing a more uniform automatic stay for FINRA individual bars pending Securities and Exchange Commission review, and reassessing MSRB board influence relative to fee contributions, with municipal advisors cited as contributing 6% of total MSRB fee revenue in 2025.