FINRA reports that, over the past 10 years, most of the exposures its regulators find have their roots in firm culture…in particular, cultures where firm management focuses on short-term profits or pursues rapid growth without a concomitant concern for controls.
FINRA says this omission is not the Chief Compliance Officer’s (CCO) responsibility alone. It is a firm-wide
responsibility. The Authority tasks firm’s boards of directors and senior management with communicating, practicing, and embedding ethical behavior and a commitment to compliance in a firm’s incentives.[spacer height=”20px”]

Supervise. Document. Retain.

FINRA expects firms to develop robust processes around such basic functions as hiring, to implement and maintain strong supervisory and risk management systems to prevent inadvertent harm to customers, and to defend against deliberate acts of malfeasance. Technology, the Authority notes, increasingly plays a significant role in minimizing exposure as many firms turn to data analytics to help them identify problematic behavior.

Adhering to FINRA Rules

With the issuance of FINRA Rules 3110, 3120, 3150 and 3170 rules, CCOs and others must:

• supervise offices of supervisory jurisdiction and inspect non-branch offices;
• manage conflicts of interest in a firm’s supervisory system;
• perform risk-based reviews of correspondence and internal communications;
• carry out risk-based review of investment banking and securities transactions;
• monitor for insider trading, conduct internal investigations and report related information to FINRA; and
• test and verify supervisory control procedures.

FINRA has its eye on you

If you’re on the list, be prepared. FINRA says its regulatory coordinators and examiners will contact and inspect their assigned firms to address regulatory questions and become familiar with how each is implementing the new rule requirements.

Will you be ready? FINRA regulators hope so. And given the abundance of independent, third-party regulatory and compliance solutions offerings, like Patrina’s, the regulators will not look kindly on excuses. So, consider launching a pre-emptive strike. Ask about our comprehensive regulatory archival and compliance solutions specifically designed for Broker/Dealers, RIAs, and FCMs.

Let’s talk (212- 233-1155).