On January 8, the Financial Industry Regulatory Authority (FINRA) released its annual Regulatory and Examination Priorities Letter (Letter) to highlight risks that FINRA believes could adversely affect investors and market integrity. FINRA will focus on these issues during its 2018 broker-dealer examinations. Similar to the previous year’s Letter, FINRA’s commentary reflects a transparent and cooperative spirit, as it gives serious consideration to feedback received during its current self-evaluation and organizational improvement initiative called FINRA360. The Letter highlights FINRA’s efforts to foster an ongoing dialogue with the securities industry and touts FINRA’s recent improvements to its examination processes and surveillance systems. The Letter also recognizes that FINRA must work to become a more effective and efficient self-regulatory organization by leveraging the expertise of member firms, especially when it comes to understanding new technologies and financial developments.
The Letter follows closely on the heels of the FINRA Examination Findings Report issued in December. The Examination Findings Report provided summaries of exam findings and common pitfalls to avoid. The findings were largely consistent with the priorities identified at the start of the year in the 2017 Priorities Letter. FINRA should be commended for its efforts in providing firms practical guidance outside of an enforcement context.
As always, firms should use the Letter to review their compliance and supervisory procedures carefully and make any necessary revisions. Firms also should be prepared to address their compliance and supervisory policies in these areas in their upcoming FINRA examinations. The following is a discussion of some of the more important points of the FINRA Letter.
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