2021 Report on FINRA’s Examination and Risk Monitoring Program 

  • Source: finra.org

Treliant Takeaway:

Treliant has the expertise and tools to help broker-dealers navigate through their various compliance program requirements, including: examination preparation; risk management; AML/BSA program reviews; testing and surveillance; registration requirements; and investigation management.  If your business needs assistance with these and other broker-dealer compliance requirements, Treliant can help.

Article Highlights:

FINRA’s 2021 Report on its Examination and Risk Monitoring Program (“Report”), like its previous annual examination priorities letters,  provides the broker-dealer community with insight into FINRA’s ongoing regulatory operations. Among other things, the Report identifies the applicable rule and key related considerations for member firm compliance programs, summarizes noteworthy findings from recent examinations and outlines effective practices that FINRA observed during its oversight, and provides additional resources that may be helpful to member firms.

The Report combines and replaces two previously published annual reports: The Report on Examination Findings and Observations and the Risk Monitoring and Examination Program Priorities Letter. FINRA stated that this new report is “designed to give member firms a single, authoritative source that provides insights derived both from the last year’s examinations and risk assessments, and from where [it has] identified emerging issues for the coming year.”

The Report identifies relevant rules and related considerations for member firm compliance programs. It summarizes noteworthy findings from recent examinations and outlines effective practices that FINRA observed during its oversight.  The Report also points to additional resources that may be helpful to member firms in fulfilling their compliance obligations.

The Report addresses 18 regulatory areas that are organized into four categories: Firm Operations, Communications and Sales, Market Integrity and Financial Management. The topic areas discussed in more detail in the report include:

  • Regulation Best Interest and Form CRS;
  • Consolidated Audit Trail compliance;
  • Cybersecurity;
  • Communications with the Public;
  • Best Execution;
  • Variable Annuities; and
  • Anti-Money Laundering, among others.

As in prior years, FINRA indicated that it will also adapt the areas of focus for its Examinations and Risk Monitoring programs during 2021 to address emerging regulatory concerns and risks for investors that may arise throughout the year.  For example, the recent trading activity in GameStop will likely be considered an emerging area of regulatory concern that FINRA will likely look into.

Author

Gino Ercolino

Gino Ercolino is a Director in Treliant’s Securities & Investment Management Compliance, Corporate & Regulatory Investigations, and Global Financial Crimes Compliance service areas. He has 25 years of experience as an attorney and financial regulator, serving in various leadership roles. Gino assists broker-dealers and registered investment advisors with satisfying their…