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Earlier in this newsletter, we heard compliance attorney Tom Giachetti talking about the fact that our regulators seem to think that more intrusive audits of fiduciary financial advisors is a great way to protect the public. Before long, you're going to hear about two week audits by examiners who are hostile, intrusive and angry–and they will be channeling the anger that SEC Commissioner Mary Schapiro seems to have had toward RIAs since she left FINRA and its broker-age/compliance culture.

Schapiro was on record long before she took over at the SEC as being hostile to the fiduciary concept and generally supportive of the compliance regulatory scheme that–let's be frank–did nothing to stop the brokerage firms from nearly wrecking the global economy and destroying customer portfolios. One can look long and hard to find any connection between RIAs who custody their assets with outside entities and the global meltdown–and, in fact, the harder you look, the more you generally find that RIAs were the voices of sanity when CDOs and other toxic securities were being manufactured and sold by the sell side. And so, paradoxically, Schapiro seems to be clamping down where there were no visible problems, and advocating that we adopt the regulatory structure favored by the malefactors. What gives?

I think we know what gives, and it is a persistent problem in our financial system. We can predict with confidence that Schapiro will leave the SEC for a lucrative job in the brokerage field–if she manages to twist logic to suit the brokerage agenda, if she can manage to avoid protecting consumers from the activities that routinely siphon billions of dollars from their pockets into wirehouse bonus pools. An impartial observer would look at these money machines and recognize that those firms don't produce any tangible products; their sole activity is to move money around, and all the money they pay themselves comes from the investors who rely on them for advice. If Schapiro can turn a blind eye to this, then after a few years she, herself, can confidently expect to be a beneficiary of this largesse.

Of course, the community of fee-compensated RIAs, who put the interests of their clients first, have no such profit margins to offer Schapiro or any other regulator who "plays ball" with us. When Congress deliberates how to change the regulatory structure of financial services, the frugal, consumer-leaning fiduciary profession will be at a disadvantage to the highly-profitable firms who can casually toss so much of their customers' money into re-election campaigns.

So the question becomes: who will speak up for the consumer? Advisors, ad-visor lobbyists and whoever talks with the SEC about consumer protection are all playing their part, but there's one constituency that seems to be missing from the debate: the press. Financial journalists have been largely focused on predicting the next upturn or downturn in the markets–and, with the exception of Michael Lewis and the recent Rolling Stone article, largely silent on how the regulatory structure for the next 50 years is in danger of being systematically rigged by the brokerage community.

So long as they can work in the dark, Schapiro and our Congressional representatives will continue to turn a blind eye to consumer protection. Without a spotlight on what, exactly, is at stake, they will follow the money. If anybody in the press turns on the spotlight and shows the voters how Washington is systematically not protecting their interests, we might see a cleaner, more open debate on the merits–which favors fiduciary advisors and ultimately the investing public.

I think it's time, now, for anybody with contacts in the press to urge an investigation and promise a good story–a dramatic conflict between what Schapiro was hired to do and what she's doing, and the possibility that the firms who brought capitalism to its knees are, as you read this, writing the laws that will govern their behavior. If they believe as strongly as we do in the welfare of their readers, they're a natural ally in this debate–and right now, it looks like they may be our last hope to protect the consumer and the professionals who put their interests first.