FINRA Statement on SEC’s OCIE Risk Alerts for Reg BI and Form CRS
On April 7, 2020, the SEC’s Office of Compliance Inspections and Examinations (OCIE) released Risk Alerts for Reg BI and Form CRS. These Risk Alerts set forth OCIE’s expectations for firms’ compliance with Reg BI and Form CRS and provide broker-dealers with information about the scope and content of OCIE’s initial examinations following the compliance date of June 30, 2020. FINRA will take the same approach as set forth in the SEC Risk Alerts when FINRA examines broker-dealers and their associated persons for compliance with Reg BI and Form CRS. This initial approach will focus primarily on assessing whether firms have made a good faith effort to establish and implement policies and procedures reasonably designed to comply with Reg BI and Form CRS. However, as always, FINRA will take action in the event FINRA observes indications of customer harm or conduct that would have violated current standards (e.g., suitability).
We also emphasize that we stand ready to work with firms and the SEC on issues that may arise in the course of examinations for compliance with Reg BI and Form CRS and understand that the coronavirus disease (COVID-19) has created challenges for firms. As with the SEC, we appreciate that implementation will be an iterative process, and our focus will be on firms continuing good faith and reasonable efforts, including taking into account firm-specific effects from disruptions caused by COVID-19.