On Dec. 6, the Financial Industry Regulatory Authority (FINRA) published its “Report on FINRA Examination Findings” (Report). The Report highlights recent examination findings that FINRA deems to be particularly important due to market impact or frequency of occurrence. The Report describes particular compliance challenges and best practices to deal with these issues.
The determination to provide this type of feedback to firms en masse was prompted by the FINRA360 initiative of CEO Robert Cook. In today’s regulatory environment, it is rare for examiners to share best practices, provide guidance or assist member firms in complying with FINRA rules and federal and state securities laws — over time, the examination process has become an enforcement-focused enterprise. FINRA should be commended for making the effort to provide guidance outside of the enforcement context, and we hope to see more of it.
Firms should consider this guidance seriously. A firm not adopting this guidance should ensure that it is able to demonstrate that its procedures are equally effective.
The following summarizes the topics outlined in the Report and focuses on FINRA’s remarks regarding best practices.
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