Changes to FINRA Enforcement Structure

Background

Until last summer, FINRA maintained two distinct enforcement teams within the organization—one handling disciplinary actions related to trading-based matters found through our market surveillance and trading examination programs, and the other handling cases referred from other regulatory oversight divisions within FINRA, such as sales practice examinations and our Office of Fraud Detection and Market Intelligence. Through FINRA360, we analyzed stated firm concerns that these dual programs sometimes resulted in duplication of effort and inconsistency of results.

In July 2017, following FINRA360 review and analysis, we began the process of combining the enforcement teams into a single Enforcement Department led by a new Executive Vice President of Enforcement. In addition, the new Executive Vice President, Susan Schroeder, now reports directly to FINRA's Chief Executive Officer (CEO) and also sits on FINRA's Management Committee.

“We built our integrated department with a focus on resolving cases with consistent, foreseeable outcomes designed to effect change—to incentivize compliance, to fix things that are broken, to make harmed customers whole and to prevent future harm from recurring.”

— Susan Schroeder, Executive Vice President, Enforcement, Speech at SIFMA Anti-Money Laundering & Financial Crimes Conference, February 12, 2018

These changes to FINRA's enforcement program are designed to recognize and reinforce the central role it plays. The unified structure will improve FINRA's ability to streamline investigations, share information, enhance consistency and maximize our resources to protect investors and the markets. These changes will result in a more effective and efficient enforcement function that will enable the organization to vigorously and fairly enforce applicable rules.

In addition to taking important steps to complete the integration of the programs, the Executive Vice President of Enforcement has provided clear communication to the industry and general public of FINRA's approach to pursuing and resolving enforcement cases.1

Summary of Actions

  • Combined FINRA's enforcement team and designated a new Executive Vice President of Enforcement reporting directly to the CEO, with a seat on FINRA's Management Committee.
  • Provided clear communication to the industry and the public of FINRA's approach to pursuing and resolving enforcement cases.
  • Developed and began implementing a departmentwide restructuring to align roles and responsibilities across the department.
  • Created a new senior management role, the Counsel to the Executive Vice President of Enforcement, responsible for reviewing the Enforcement docket holistically and identifying and escalating matters for discussion to ensure a cohesive organizationwide approach to novel or interpretive issues.
  • Began developing a new business process to centralize and enhance reviews of Enforcement's recommendations to achieve greater consistency and transparency in outcomes.
  • Consolidated the Enforcement litigation docket to achieve a unified approach, strategic staffing and shared best practices in all FINRA disciplinary litigations.

 


1. www.finra.org/newsroom/speeches/021218-remarks-sifma-aml