Nearly one year into her tenure as Head of Enforcement at the Financial Industry Regulatory Authority (FINRA), Susan Schroeder has completed a substantial reorganization and integration of the Enforcement and Market Regulation Legal departments, which has been branded “One Enforcement.” The goals for this effort, which resulted from CEO Robert Cook’s yearlong listening tour and the FINRA360 project of identifying opportunities for FINRA to be more efficient and effective, are eliminating the perceived differences between the two departments and ensuring that cases are approached consistently and result in foreseeable conclusions.
As a result of the restructuring, Schroeder has four new direct reports. Lizzie Hogan has been hired as Senior Vice President of Market Regulation Enforcement, reporting directly to Schroeder. Jessica Hopper has been promoted to Senior Vice President of Main Enforcement, essentially replacing the co-deputy roles formerly held by Schroeder and Russ Ryan during Brad Bennet’s tenure as Head of Enforcement. Christopher Kelly has been promoted to Senior Vice President of Member Regulation Enforcement, essentially filling the role vacated by Hopper, overseeing the regional enforcement program. Sue Light is retiring as Chief Counsel in July and we understand she is not being replaced. The two remaining Chief Counsel in New York Enforcement are Gina Petrocelli and Richard Chin. The two Chief Counsel at Main Enforcement in Rockville are Jim Day and Paul Schindler. The Market Regulation Enforcement Chief Counsel are, recently promoted, Tina Gubb and Andrew Beirne.
Schroeder’s fourth direct report is the result of creating the Office of Counsel to Head of Enforcement. Lara Thyagarajan has been promoted to Senior Vice President of that area. Schroeder said this team would have a role ensuring that an efficient and consistent approach is taken on incoming matters and, perhaps more important, will be consulting at the end of a matter, ensuring that the outcome is foreseeable and achieves deterrence. The Enforcement attorneys primarily responsible for litigating contested cases are also reporting to Thyagarajan.
Aside from the integration, many of the individual units within Enforcement, some of which had hardly changed in 10 years, have been reshuffled. In addition, Schroeder reinstituted cross-geographic reporting lines — which Bennett had eliminated — with the goal of achieving more consistent approaches to investigations and outcomes regardless of the office from which a matter is investigated. Under the new reporting structure, some Directors in New York will report to Chief Counsel in Rockville and vice versa. Directors will also supervise teams consisting of staff in both New York and Rockville. As a result of the unit restructuring, approximately 10 long-tenured roles were eliminated and at least some will be replaced by more junior attorneys.
Schroeder is also restructuring the investigators who had been embedded in each Enforcement unit. All of the investigators, including Directors, have been consolidated into a stand-alone unit of investigators that the Enforcement units can draw on for any case. The investigators will report to a Vice President of Investigations, who has not yet been named.
The One Enforcement initiative indicates that Cook and Schroeder are implementing concrete measures to address industry concerns about consistency and foreseeability. The goals for this initiative are laudable as the industry and the enforcement bar should benefit from disciplinary actions that clearly and consistently articulate why certain misconduct violated rules and how sanctions were applied. However, there is an open question whether “consistency” will mean higher fines and expanded investigations in matters historically considered routine trading reviews administered by Market Regulation.
