2020 Exams Will Be Conducted Under Unified Program
WASHINGTON—FINRA announced today the senior leadership team under the new examination and risk monitoring structure within the organization. This marks the consolidation of FINRA’s three exam functions into a single, unified program—a process that began in October 2018.
FINRA regulates more than 3,600 firms and 630,000 individual brokers, and regularly examines every firm for compliance with FINRA’s rules and those of the Securities and Exchange Commission and the Municipal Securities Rulemaking Board. Those examination responsibilities previously were divided among three different programs responsible for business conduct, financial and trading compliance. The consolidation brings those programs under a single framework designed to better direct and align examination resources to the risk profile and complexity of member firms. The FINRA360 organizational review helped inform the development of the new framework by identifying areas for improvement in the current programs.
“Our commitment to our mission of protecting investors and market integrity has guided us throughout this process,” said Bari Havlik, Executive Vice President, Member Supervision. “Implementing a unified program structure will help make us a more agile and risk-focused regulator, able to direct our expertise and resources in a more tailored way. As a result, we expect to continue to become more effective at examining firms for compliance and protecting investors.”
As part of the new program, all FINRA member firms are grouped into one of five main firm business models: Retail, Capital Markets, Carrying and Clearing, Trading and Execution, and Diversified. Each of these groupings has several sub-groups to more precisely categorize firms with similar business models and activities. Each grouping is headed by a senior leader. Each firm will be assigned a single point of accountability, the leader who has ultimate responsibility for the ongoing risk monitoring, risk assessment, planning and scoping of examinations tailored to the risks of a firm’s business activities. In the coming weeks, FINRA will notify each member firm of its single point of accountability and its new risk monitoring teams. FINRA’s 2020 exam program will operate under this new structure.
As previously announced, exams executed pursuant to FINRA’s Regulatory Service Agreements (RSAs) with exchange clients will be performed by a separate, specialized unit housed in FINRA’s Market Regulation Department to ensure consistency across RSA exams, provide dedicated resources to RSA-specific rules and trading, and promote economies of scale for RSA client work. Market Regulation will also have primary responsibility for executing exams for the Trading and Execution firm grouping, working in close coordination with the consolidated FINRA Examination and Risk Monitoring team.
Senior Leadership Team
The senior leadership team that will oversee Member Supervision’s exam and risk monitoring functions and report directly to Havlik is as follows:
- Tom Nelli, Senior Vice President, will lead the teams responsible for executing the examinations, setting standards across the firm groupings, and quality assurance testing.
- Ornella Bergeron, Senior Vice President, will lead the Single Point of Accountability and Risk Monitoring teams for the Carrying and Clearing and Diversified firm groups.
- Bill St. Louis, Senior Vice President, will lead the Single Point of Accountability and Risk Monitoring teams for the Retail and Capital Markets firm groups.
- Tim Thompson, Senior Vice President, will lead the Single Point of Accountability and Risk Monitoring teams for the Trading and Execution firm group. He will remain a part of Market Regulation’s Trading and Financial Compliance Examination team, working closely with Havlik and the Member Supervision team.
The following Member Supervision leaders will provide critical guidance and support to inform FINRA’s exam and risk monitoring efforts, also reporting directly to Havlik:
- Kerry Gendron, Senior Vice President, Data Analytics and Technology Strategy, will lead a team focused on the strategic adoption of data analytics and technology solutions for Member Supervision.
- Ursula Clay, Senior Vice President and Chief of Staff, will lead the Core Functions teams that will provide support across all Member Supervision groups.
Mike Rufino, Executive Vice President, will continue to serve in his role as a Senior Advisor including focusing on investor protection issues and will report directly to Havlik. Bill Wollman, Executive Vice President, will lead a new Office of Financial and Operational Risk Policy within FINRA’s Office of General Counsel, reporting directly to Chief Legal Officer Robert Colby while also continuing to coordinate closely with Member Supervision.
Additionally, in August FINRA announced that Executive Vice President of the Office of Fraud Detection and Market Intelligence Cam Funkhouser would be retiring at the end of this year. In his place, FINRA is creating a new executive role leading the National Cause and Financial Crimes Detection Programs and has begun a search for that position. This new role will be responsible for:
- a consolidated National Cause Program;
- the Office of the Whistleblower and Tip Program;
- Fraud Surveillance;
- Insider Trading and Private Investment in Public Equity Surveillance; and
- Specialist teams for Anti-Money Laundering and Cybersecurity.
To learn more about the exam and risk monitoring transformation, listen to the FINRA Unscripted podcast.
FINRA is a not-for-profit organization dedicated to investor protection and market integrity. It regulates one critical part of the securities industry – brokerage firms doing business with the public in the United States. FINRA, overseen by the SEC, writes rules, examines for and enforces compliance with FINRA rules and federal securities laws, registers broker-dealer personnel and offers them education and training, and informs the investing public. In addition, FINRA provides surveillance and other regulatory services for equities and options markets, as well as trade reporting and other industry utilities. FINRA also administers a dispute resolution forum for investors and brokerage firms and their registered employees. For more information, visit www.finra.org.