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December 11, 2017
Gordon Rees Scully Mansukhani, LLP
111 W. Monroe Street, Suite 1600
Phoenix, AZ 85003
FINRA’s examination program plays 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”) that are conducted on a regular cycle basis: each firm is examined at least once every four years, and many are examined even more frequently. In connection with each of these examinations, FINRA prepares a report—which is available only to the relevant firm—addressing certain aspects of the firm’s compliance with securities rules and regulations.
1. What’s new?
Beginning with the 2018 program, FINRA is partnering with Georgetown University’s McDonough School of Business to deliver the FINRA Institute at Georgetown Certified Regulatory and Compliance Professional (CRCP)® program.
2. Why is FINRA making this change?
Following the terrorist attacks of September 11, 2001, Congress passed the USA PATRIOT Act, in part, to strengthen the anti-money laundering (AML) and counter-terrorist financing provisions of the Bank Secrecy Act (BSA) and extend them to broker-dealers. Among other provisions, the BSA requires firms to monitor for, detect and report suspicious activity to the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN).
FINRA Rule 2111 states that a “member or an associated person must have a reasonable basis to believe that a recommended transaction or investment strategy involving a security or securities is suitable for the customer, based on the information obtained through the reasonable diligence of the member or associated person to ascertain the customer’s investment profile.” In addition, FINRA Rule 3110 obligates firms to establish and maintain a system to
The Trading & Financial Compliance Examinations (TFCE) section of the Market Regulation Department (Market Regulation) at the Financial Industry Regulatory Authority, Inc. (FINRA) is conducting a review of [FIRM] concerning the impact the receipt of order routing inducements, such as payment for order flow and maker-taker rebates, has on the Firm’s [equities and options] order routing practices and decisions. As part of this review, TFCE requests that the Firm provide complete and detailed responses to the following: