On January 4, new President and CEO Richard Cook issued FINRA's Annual Regulatory and Examination Priorities Letter. This year's list in summary is:
New for 2017:
Targeted electronic off-site reviews "on select firms not scheduled for cycle exams."
An annual summary report of key exam findings on selected issues
More resources for small firms, including:
- Compliance calendar;
- Compliance service provide directory.
High-Risk / Recidivist Brokers
Dedicated exam group
Supervisory procedures and due-diligence
Branch inspections
Sales Practices
Seniors: fraud and abuse; complex products; microcap pump-and-dump
Suitability & Concentration: interest-rate risk; ETPs, non-traded REITs
Churning Long-term Products: mutual funds, UITs, Vas
OBA & Private Securities Transactions
Social Media & ESI Retention / Supervision
Financial Risks
Liquidity Risk: firms' liquidity risk management plans (Reg. Notice 15-33).
Financial Risk Management
Credit Risk: Rule 4210 - margin on covered agency trades
Operational Risks
Cybersecurity: risk mitigation programs, especially branch office controls and WORM document retention
Supervisory Controls Testing
Customer Protection and Asset Segregation
Reg. SHO: good locate and closing out fails
AML: automated process deficiencies; dedicated surveillance
MA Registration: proper registration and examination
Market Integrity
Manipulation: Big data to detect layering and spoofing
Best Execution: Reg. Notice 15-46
Audit Trail Reporting: responding promptly to early remediation reports
Tick Size Pilot
Market Access Rule compliance
Trading Exams: alternative trading systems disclosures
Fixed Income surveillance
The letter is here.
Thomas K. Potter, III (tpotter@burr.com) is a partner in the Securities Litigation Practice Group at Burr & Forman, LLP. Tom is licensed in Tennessee, Texas and Louisiana. He has over 30 years' experience representing financial institutions in litigation, regulatory and compliance matters. See attorney profile.
© 2017 by Thomas K. Potter, III (all rights reserved).
PartnerTom Potter is a Partner in the firm's Nashville office, and his practice focuses on securities, corporate disputes, and appellate litigation. Tom has over 35 years of experience representing business interests.
Tom represents ...
