FINRA wants more Broker-Dealer standards and compliance

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In his address at the 2015 FINRA Annual Conference in Washington, DC last week, FINRA Chairman and Chief Executive Officer Richard Ketchum asked attendees (paraphrasing here): Have you been a “fair dealing” broker-dealer this year or an “unfair dealing” broker-dealer? When you recommended a security or strategy to retail investors, did you have the “best interests” of your client at heart? Or…

The wrong answer will result in more than a simple lump of coal in your stocking.


More compliance is coming…

Although Mr. Ketchum noted that “time constraints this morning prevent me from giving a detailed analysis of the breadth of the SEC and FINRA regulatory requirements,” he did say that he “continues to believe that the clarity of a ‘best interest of the customer’ standard would be an important step forward in encouraging firm compliance cultures that translate to consistent actions to place the interests of customers first.”

FINRA rules already are backed by an active program that examines all broker-dealers at least every four years, depending on their size and activity (large firms are reviewed every year). In 2014 alone, FINRA’s risk-based programs result in nearly 6,800 cycle, cause and branch office examinations. Moreover, Mr. Ketchum said, Finra’s “rules are also backed by an active enforcement program. In the last five calendar years, we expelled 107 firms from the securities industry, barred 2,345 individuals and suspended another 3,417 from associating with FINRA-regulated firms — and ordered over $100 million in restitution to investors.”

Combining these statistics, he added, with strong written supervisory requirements and comprehensive oversight of firms’ advertising to ensure both fairness and balance, results in a “very strong and effective regulatory framework.”

Are you sweating yet?

Your Chief Compliance Officer job just got bigger

When it comes to FINRA or SEC regulatory compliance, there is no room for error. Creating checklists, backstops, and dual control is imperative. Ensuring that every human element has a substitute and contingency plan permits your organization to handle any variable it confronts.

Don’t be afraid to ask for help. Pick up the phone. Open the lines of communication with a trusted technology partner like us to ensure all your processes and procedures are in place and functioning smoothly.. Ask about our comprehensive regulatory archival and compliance solutions specifically designed for Broker/Dealers, RIAs, and FCMs. Or…you could do it all yourself…

Let’s talk (212- 233-1155).

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