When Robert Cook becomes FINRA's CEO later this year, he'll have to steer the regulator through a bevy of hot button issues and increasingly sharp criticism from Congress, experts and critics say.

"FINRA is facing so many external pressures to its existence," says Bradley Bondi, a partner at Cahill Gordon & Reindeland and a leader of the firm's securities enforcement practice. "It does not surprise me that it picked someone like Bob Cook who is an experienced broker-dealer attorney, is well versed on the current issues and knows his way around the SEC."

Among the top issues that Cook will face, industry observers point to FINRA's evolving role within the regulatory space as well as calls for greater transparency and investor protections, particularly with regard to elderly clients. Some of FINRA's critics also question whether Cook, who has spent most of his career in private practice, will be sufficiently vigilant in maintaining investor protections.

Ronald Colombo, a professor at Maurice A. Deane School of Law at Hofstra University, says Cook will have a tough balancing act as FINRA CEO.

"Unlike the SEC which only answers to Congress, he has a tightrope to walk. He has to satisfy both investors and listed companies," Colombo says.

“Mr. Cook's views on these critically important investor protection issues are unfortunately unknown at this point,” says Andrew Stoltmann, an attorney who represents investors in disputes with brokerage firms.

Some of the issues and criticisms that await Cook have been building for some time.

PIABA, a group of attorneys who represent investors, has been prodding FINRA to increase BrokerCheck's transparency to address what PIABA describes as the shortcomings of the online service. PIABA says that key information is sometimes missing from advisers' BrokerCheck records. That information is sometimes contained within an adviser's CRD record, but does not show up on the publicly available BrokerCheck website.

Image: Bloomberg News
Robert Cook will take over as FINRA CEO later this year, and will face a bevy of hot button regulatory issues according to experts and critics. (Image: Bloomberg News)

"I appreciate that FINRA has spent money to promote the BrokerCheck system," says PIABA President Hugh Berkson, pointing to the regulator's recent advertising campaign to promote BrokerCheck among investors. "And it's certainly better than nothing, so let's not kid ourselves. But… if that system is incomplete and therefore misleading, then that is problematic."

Christine Lazaro, director of the Securities Arbitration Clinic at St. John's University School of Law, says preventing elder financial abuse has become an ever more important issue as more baby boomers enter retirement.

Under Ketchum, FINRA has made moves to buttress protections for older clients. Last year, the regulator launched a helpline that it says received more than 4,600 calls so far .

Lazaro also points to growing concerns about cybersecurity. In recent years, there have been high profile data breaches at firms like J.P. Morgan Chase and Morgan Stanley.

"There is a tremendous amount of confidential customer information at the firms," she says.

There's also a question as to what role does FINRA have in the ongoing debate over an industrywide fiduciary standard. The Department of Labor's contentious rule, finalized in April, faces several lawsuits launched by industry trade groups. Meanwhile, the SEC, which is charged with creating a fiduciary rule under the Dodd-Frank Act, says it won't finalize its own rule-making before Obama leaves office.

Lazaro says FINRA has an opportunity to set expectations for firms.

"The place for FINRA to act is really in terms of how it expects its member firms to manage conflicts of interest, in other words acting in the best interest of customers," she says. "FINRA has long said it expects firms to act in the best interest of customers, but the question is how do you define best interest?"

Republican and Democratic congressmen have also become more vocal in their criticism of FINRA's activities. In May, Senators Elizabeth Warren, D-Mass., and Tom Cotton, R-Ark., said in a letter to FINRA that the regulator was failing to do "nearly enough" to protect investors from unscrupulous brokers.

"Yet the evidence clearly shows that FINRA's efforts to date have not been enough to address the incidence of misconduct among financial advisers. Each day that FINRA fails to take stronger action is another day that working families will be exposed to an unacceptably high risk of financial adviser misconduct," the senators said.

Warren has also asked current FINRA CEO Richard Ketchum pointed questions about the regulator's efforts to get the worst offenders out of the industry. She also pressed Ketchum on what support is provided to investors who win arbitration awards against firms and advisers that don't make payments on those awards. Ketchum said that FINRA was exploring creating a fund for wronged investors.

Read more: FINRA May Create Fund for Unpaid Arbitration Awards

Groups like PIABA will be urging Cook to continue that work.

"The problem exists and it's an unacceptable one. And this isn't an arbitration problem; it's an industry one. Virtually every customer has an arbitration clause in their contract," Berkson says.

“Unlike the SEC which only answers to Congress, [Cook] has a tightrope to walk. He has to satisfy both investors and listed companies,” says Ronald Colombo, a law professor at Hofstra University.

Cook doesn't take on his new role at FINRA until August or September, according to FINRA. But a few FINRA critics have called into question how vigilant he will be in protecting investors given that he has worked at a law firm that works for financial services firms.

Cook spent most of his career at Cleary Gottlieb Steen & Hamilton, which he joined in 1992 and rejoined in 2013 after a three year stint as director of Division of Trading and Markets at the SEC.

His profile on the firm's website says his practice focuses on regulation of securities markets, including broker-dealers, and that his expertise includes white collar defense, according to the website.

"Cleary Gottlieb’s white-collar defense and investigations team advises and defends the world’s leading financial institutions and multinational corporations and, in certain cases, their senior employees, in a broad range of sensitive criminal and regulatory matters," the firm says on its website.

Some of FINRA's critics think that may create conflicts of interest for Cook.

"You need cops at FINRA. You want somebody who wakes up in the morning suspicious and cynical," says Bartlett Naylor, financial policy advocate at Public Citizen, an investor advocacy group that has been critical of FINRA and its member firms.

Andrew Stoltmann, a Chicago-based attorney who represents investors in disputes with financial services firms, says that on the surface Cook's background appears to be problematic.

"When you come from a firm that does a tremendous amount of defense work – well that's an optics issue there," Stoltmann says.

Neither Cook nor his law firm returned calls seeking additional comment. A spokeswoman for FINRA says his practice involved advising and consulting with clients.

"To the extent those clients were securities firms, he will follow FINRA’s ethics practices. He has demonstrated the ability to step back from his practice and act on behalf of investors previously, as he did during his tenure at the SEC," the spokeswoman says.

Stoltmann says it remains to be seen how Cook will lead the regulator on these critical regulatory issues and respond to pressures from critics. "Mr. Cook's views on these critically important investor protection issues are unfortunately unknown at this point."

He adds that Cook will be forced to answer to many different parties. "I don't envy Mr. Cook," Stoltmann says. "He has an extraordinarily difficult job."