Tag Archive for: enforcement

Financial Industry Regulatory Authority 2016 Exam Priorities

On January 5, the Financial Industry Regulatory Authority (FINRA) released its annual Regulatory and Examination Priorities Letter (Letter) to highlight risks that FINRA believes could adversely affect investors and market integrity. This year’s Letter differs from those in the past in focusing on three broad, principle-based concerns in addition to the usual list of narrowly focused areas that examiners will certainly review. These broad areas are 1) culture, conflicts of interest and ethics; 2) supervision, risk management and controls; and 3) liquidity. The discussion is helpful because it explains FINRA’s overarching concerns, philosophy and its potential basis for pursuing enforcement actions. Firms should read this discussion carefully and internalize its principles. Firms should be able to document and demonstrate to FINRA their appropriate regulatory and ethical culture and how they actively identify and manage potential conflicts of interest. Likewise, in today’s highly automated and data-dependent markets, firms must be able to demonstrate that their procedures and policies related to cybersecurity, technology management and data quality are up to date, adequately resourced and strictly followed.