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Day: January 23, 2019

FINRA Examination Priorities Letter Focuses on RegTech and Digital Assets

FINRA released its 2019 Examination Priorities Letter, spotlighting new areas including online distribution platforms and fintech, regulatory technology, digital assets, and fundraising for outside business activities.  FINRA will closely scrutinize member firms’ participation with online securities distribution platforms and whether firms are aiding the unlawful distribution of unregistered securities by handling customer accounts and/or receiving transaction-based compensation.  When using regulatory technology tools, firms will be asked how they supervise third party vendors and how they protect customer information.  FINRA will work with the SEC to ensure that member firms implement adequate controls and supervision when engaging with digital asset offerings through marketing, clearing, and recordkeeping activities.  FINRA continues its focus on outside business activities with a special emphasis on fundraising for personal benefit.  FINRA also makes clear that it will continue to review firms for compliance with longstanding priorities including suitability, fund share classes, private placements, communications, AML, cybersecurity, senior investors, best execution, and supervision. 

Compli-pros should read this Examination Priorities Letter together with the recently released Examinations Findings to create an inventory of compliance risks that the firm should immediately address through gap analysis and enhanced procedures.  Our experience is that the FINRA examiners hew closely to the announced priorities.