FINRA Forward in Enforcement
By Robert Cook, President and CEO, FINRA
To best serve our mission of protecting investors, safeguarding market integrity, and supporting vibrant capital markets, FINRA must regularly review and improve its regulatory policies and programs to make them more effective and efficient. This commitment to continuous improvement drives our FINRA Forward initiative, which we launched earlier this year to explore opportunities to enhance and evolve our programs in step with a constantly changing industry and marketplace.
As a self-regulatory organization, a key area of focus for FINRA is supporting our member firms—who are at the front lines of protecting their customers—in achieving compliance with applicable regulatory requirements. We pursue this goal through ongoing risk monitoring relationships with our member firms, regular examinations, market surveillance, education and outreach, sharing best practices, highlighting emerging risks, and other efforts aimed at identifying and proactively addressing potential issues. These activities are informed by the extensive input we receive on our oversight activities and on industry practices and developments from our many Advisory Committees and member firm representatives on our Board.
However, FINRA must also be prepared, when necessary, to bring enforcement actions to address wrongdoing, deter future misconduct, and protect investors, member firms, and markets from significant harm. Fair and effective enforcement actions play a vital role in preserving confidence in America’s securities markets.
That’s why enforcement is an important focus for FINRA Forward, alongside examinations, market surveillance, and our other core regulatory functions for overseeing member firms and their associated persons. FINRA enforcement should work effectively and efficiently as an integral part of our broader oversight program. And it should afford member firms and their associated persons a transparent, fair, and consistent process.
FINRA’s Head of Enforcement, Bill St. Louis, is leading an effort to develop meaningful, common-sense improvements to our program with these goals in mind. In addition, to complement this effort, FINRA has engaged two outside experts—former SEC Commissioner Troy Paredes of Paredes Strategies and Professor Paul Eckert of William and Mary Law School—to ensure we benefit from external perspectives. Messrs. Paredes and Eckert will help identify and assess opportunities for FINRA’s enforcement function, together with related oversight programs, to better serve FINRA’s self-regulatory mission. Among other areas, they will consider governance, policies, processes, and communications, as well as how FINRA enforcement works with other FINRA departments and federal and state regulators. They will share their views with FINRA’s Board of Governors.
Together, Messrs. Paredes and Eckert bring to this engagement a deep understanding of, and decades of experience with, securities regulatory enforcement functions from both the private sector and government perspective. We are grateful for their willingness to undertake this work.
As I said when we launched FINRA Forward, our goal is to ensure that our rules, programs, and activities are in line with the opportunities and risks in today’s capital markets. We are committed to advancing toward that goal in enforcement—an essential tool to protect investors, markets, and our member firms—as well as in our broader regulatory program.