In a recent Financial Services Institute (FSI) conference held in Washington, D.C. on May 20, 2025, Securities and Exchange Commission (SEC) Commissioner Hester Peirce and Financial Industry Regulatory Authority (FINRA) CEO Robert Cook emphasized the critical need for a robust partnership between their organizations to maintain a “pulse on the market.”
Their remarks underscored an aspirational goal of fostering full public participation in capital markets while balancing regulatory oversight with industry innovation.
However, despite these public commitments, retail investors remain deeply skeptical of both the SEC and FINRA, citing concerns over affiliations with anti-regulatory groups, connections to controversial market practices, and unresolved issues like the MMTLP fraud.
Additionally, the recent appointment of Paul Atkins as SEC Chair has further fueled distrust, with critics arguing that his focus on innovation overlooks pressing market problems affecting retail investors.
The SEC-FINRA Partnership: A Vision for Collaboration
During the FSI conference, Peirce and Cook articulated a shared vision for a regulatory framework that supports market integrity and investor participation.
Peirce stressed the importance of a balanced approach, noting that the SEC must “add value” rather than create unnecessary burdens for market participants.
She advocated for private market solutions where feasible, suggesting that overregulation can stifle innovation.
Cook echoed this sentiment, highlighting FINRA’s priorities of modernizing rules, empowering member-firm compliance, and addressing cyber- and fraud risks.
He emphasized the need for a regulatory structure that incorporates industry voices to navigate the complexities of today’s markets. “Are the rules getting in the way of running modern business?
We don’t want to impose unnecessary burdens during our oversight activity,” Cook stated.
This partnership is seen as essential for maintaining investor protection while fostering an environment conducive to financial innovation.
FINRA, as a self-regulatory organization (SRO) overseen by the SEC, plays a pivotal role in regulating broker-dealers, enforcing compliance, and providing surveillance for equities and options markets.
Or at least it’s supposed to.
The SRO has lost the trust of retail investors particularly in the MMTLP community when FINRA issued a rare U3 halt and delisted the ticker, trapping investors from taking their money out.
The collaboration aims to streamline regulatory processes, reduce redundancies, and adapt to evolving market dynamics, such as the rise of digital assets and complex trading platforms.
However, despite these lofty goals, retail investors remain unconvinced, pointing to systemic issues and perceived conflicts of interest that undermine trust in both agencies.
Retail Investor Distrust: A Growing Concern
Retail investors, who have become increasingly active in capital markets, are voicing frustration with the SEC and FINRA, perceiving them as disconnected from the needs of the “small investor.”
Social media platforms like X have become a sounding board for these grievances, with posts highlighting allegations of regulatory inaction and bias toward large financial institutions.
For example, one user remarked, “No one is looking out for the small retail investor. We are considered the right size to scam,” reflecting a sentiment that regulators prioritize Wall Street over Main Street.
This distrust is compounded by specific concerns about the leadership of both agencies.
Hester Peirce, often referred to as “Crypto Mom” for her advocacy of digital assets, has faced criticism for her ties to anti-regulatory groups.
Similarly, FINRA’s credibility has been tarnished by its alleged connections to dark pool trading venues, which are private exchanges that allow large investors to trade anonymously.
Critics argue that dark pools obscure market transparency and disadvantage retail investors by enabling high-frequency trading firms to front-run orders.
Posts on X have accused FINRA of complicity in these practices, with one user stating, “FINRA broke multiple rules,” pointing to a lack of accountability in overseeing these opaque trading platforms.
While FINRA has taken steps to address market transparency, such as modernizing its rulebook and enhancing cybersecurity measures, these efforts have done little to assuage retail investors’ concerns about systemic inequities.
The MMTLP Fiasco: A Flashpoint for Distrust
Perhaps the most glaring example of retail investor frustration is the unresolved MMTLP (Meta Materials Preferred Shares) fraud controversy.
The issue centers on FINRA’s decision to halt trading and delist MMTLP, which investors claim was mishandled and even fraudulent.
Despite numerous inquiries and demands for an audited share count, FINRA and the SEC have provided little clarity, leaving investors “in limbo” for over 700 days.
X posts have been particularly vocal about this issue, especially after both Peirce and former SEC Chair Gary Gensler continued to ignore the MMTLP situation.
One user noted, “@HesterPeirce admitted at the @SECGov they didn’t know what to do about #MMTLP.
So clearly they chose to do NOTHING.”
Another post alleged premeditated misconduct by FINRA, claiming that CEO Robert Cook discussed MMTLP days before the corporate action, suggesting intent to harm retail investors.
These accusations, reflect a broader sentiment that FINRA and the SEC are either unwilling or unable to address retail investor grievances effectively.
In 2023, transcripts circulated X revealing there were active fraud investigations prior to the halt and delisting of MMTLP.
Paul Atkins and the Innovation-First Agenda
The recent appointment of Paul Atkins as SEC Chair has further exacerbated retail investor unease.
Atkins, known for his pro-market stance and emphasis on innovation, has been criticized for prioritizing deregulation and technological advancement over addressing systemic market issues.
Retail investors fear that his focus on fostering innovation—such as supporting blockchain technologies and easing restrictions on private markets—may sideline critical issues like market manipulation, counterfeit shares, and trade settlement failures.
One X user expressed frustration, stating, “Why are SEC Chair Paul Atkins & Commissioner Hester Peirce focused on ‘growth’ while trillions in counterfeit shares flood our markets?”
Atkins’ tenure comes at a time when retail investors are demanding greater transparency and accountability, particularly regarding issues like the Consolidated Audit Trail (CAT), a system designed to track trading activity but which critics claim the SEC has been slow to implement fully.
The perception that Atkins is more concerned with market “growth” than resolving these longstanding issues has deepened distrust among retail investors, who feel regulators are out of touch with their concerns.
Balancing Regulation and Innovation: A Path Forward?
Despite the challenges, Peirce and Cook’s call for collaboration highlights the complexities of regulating modern financial markets.
FINRA’s recent initiatives, dubbed “FINRA Forward,” aim to modernize its rulebook, reduce compliance burdens for smaller firms, and enhance protections against cyber threats and fraud.
These efforts include real-time alerts, scenario-based training, and a review of regulatory friction points to facilitate innovation.
However, these initiatives are unlikely to restore trust unless they directly address retail investor concerns, such as transparency in dark pools and accountability in cases like MMTLP.
For the SEC and FINRA to regain credibility, they must demonstrate a commitment to tackling systemic issues head-on.
This could involve greater transparency in dark pool operations, expedited resolution of cases like MMTLP, and a clear stance against market manipulation.
Additionally, addressing perceptions of regulatory capture—such as Peirce’s ties to anti-regulatory groups—will be crucial in rebuilding confidence.
Retail investors are not inherently opposed to innovation, but they demand a regulatory framework that prioritizes fairness and accountability over unchecked market growth.
Only then can they fulfill their mission of protecting investors while fostering a vibrant capital market.
But I’m curious to know what you think — leave your thoughts below or start a discussion in the Retail Investor Forum.
I also want to thank Melanie Hughes for buying me a coffee ☕ using the link down below, I hope you see this 🫶
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About The Author
These regulators have been captured and corrupted for a long time. I exposed FiNRA especially back in 2014 when my book In Bed with Wall Street was published. The corruption was bad back then. It’s clearly only gotten worse.
Drop the link to your book!