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News Link • Surveillance

Get Ready for Regulators to Peer Into Your Portfolio

•,By Jason Zweig
 If adopted, Cards would revolutionize how regulators do their jobs and could make it harder for unscrupulous brokers to bilk customers.

But some critics think it could endanger the privacy and security of investors’ confidential data. And the proposal ups the ante for Finra, which often has been criticized for letting wrongdoers slip through the cracks.

Under Cards (which stands for Comprehensive Automated Risk Data System), Finra would collect—probably weekly—a record of activity at all of the more than 4,100 brokerage firms nationwide.

Finra would scour the data continuously, looking for any hints that a firm or a broker might be taking advantage of a client: excessive trading or commissions, switching from one mutual fund to another, overcharging for bond E*TradeETFC +0.04%s, overconcentrating in risky or illiquid securities, and so on.

Cards “would provide us with a treasure trove of information and the ability to focus quicker on firms that are placing investors at high risk,” Richard Ketchum, Finra’s chairman and chief executive, said in an interview.

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