FINRA has published its annual Regulatory and Examination Priorities Letter, which focuses on high risk and recidivist brokers, protecting senior investors, and cybersecurity. FINRA will examine how firms hire and supervise brokers with disciplinary records. FINRA will evaluate branch-office inspection programs including client communications and outside business activities. Examination staff will scrutinize sales practices for senior investors including suitability when recommending complex products and penny stocks. FINRA expressed significant concern about cybersecurity including how firms prevent data loss, monitor passwords, ensure physical security, and maintain records. In addition to these central themes, FINRA will continue to examine product suitability and concentration, outside business activities, liquidity risks, supervisory controls, anti-money laundering, and best execution. FINRA CEO Robert Cook characterized FINRA’s priorities as a “focus on core ‘blocking and tackling’ issues of compliance, supervision and risk management.”
OUR TAKE: In past years, FINRA exams closely followed the Exam Priorities Letter. Compli-pros should tailor their compliance programs and training to the topics and practices described in the Letter.