2013 Report on Conflicts of Interest

Monday, October 14, 2013

Today, FINRA published a Report on Conflicts of Interest in the broker-dealer industry to highlight effective conflicts management practices.

FINRA began reviewing conflict management practices at a number of large firms in July 2012 to better understand how the industry manages conflicts and to identify potential problem areas and effective practices to manage those challenges. The review underscores our mission of protecting investors.

While this report recognizes that many firms have made progress in improving the way they manage conflicts, it also emphasizes that there is still more firms need to do. To help firms analyze the conflicts they face and implement a conflicts management framework appropriate to the size and scope of their business, we are publishing examples of how some large broker-dealer firms address conflicts. The report does not address the spectrum of conflicts that may arise from a firm's specific business lines, but focuses instead on approaches to managing conflicts that firms can apply across their business. There is no one-size-fits-all framework; however, these approaches can help firms of all sizes and business models improve their conflicts management practices.

FINRA stresses in the report that it is not intended to express any legal position, and does not create any new legal requirements or change any existing regulatory obligations. Our expectation is that firms will use this report to stimulate dialogue about the conflicts they face and to implement a strong conflict management framework that's appropriate to their business.

I welcome any thoughts or reactions you may have to our conflicts report and other areas where you believe FINRA should focus.


Richard Ketchum Signature
Richard G. Ketchum
Chairman and CEO