FINRA’s examination, surveillance and risk monitoring programs play a central role in supporting FINRA’s mission of investor protection and market integrity. A main component of this program is FINRA’s examinations of broker-dealers (firms or members), where FINRA prepares a report—which is available only to the relevant firm—addressing certain aspects of the firm’s compliance with specific securities laws and regulations. Firms must address the issues identified by FINRA, and many do so by proactively taking corrective action before we conclude our exam. Through this sort of rapid remediation, firms strengthen their compliance and supervisory programs, which ultimately helps better protect investors and maintain the integrity of the markets.
FINRA is issuing this report as another resource for firms to strengthen their compliance programs and supervisory controls. Some firms have requested that FINRA make publicly available a summary of observations from the firm examination program so they can further improve their practices and processes based on the experiences of other firms, as well as better anticipate and address potential areas of concern in advance of their own examinations.
This report focuses on selected observations from recent examinations that FINRA considers worth highlighting because of their potential significance, frequency, and impact on investors and the markets. This report does not represent a complete inventory of observations from all FINRA examinations, nor does it indicate that any specific issues exist at any particular firms. In fact, an individual firm may not have any deficiencies identified in this report, or may have other deficiencies that are not identified. Further, readers should not interpret this report as creating new legal or regulatory requirements or new interpretations of existing requirements.
This report also describes practices FINRA has observed to be effective in certain circumstances, which firms may use as a resource to improve their compliance and supervisory programs. There should be no inference, however, that FINRA requires firms to implement any specific practices described in this report or those that extend beyond the requirements of existing securities rules and regulations.
FINRA expects that this reporting will evolve over time as we work to ensure that it supports firms’ compliance, risk management and supervisory efforts. FINRA welcomes feedback on how we can improve the content, structure, format or other elements of future reports on examination findings. If you have suggestions, please contact Carlo di Florio, Executive Vice President, Member Supervision/Shared Services, at (212) 858-3908 or by email; or Steven Polansky, Senior Director, Member Supervision/Shared Services, at (202) 728-8331 or by email.