Reorganization of FINRA’s Examination Program Taking Shape

At FINRA’s recent annual conference in Washington D.C., President and CEO Robert W. Cook and Executive Vice President of Member Supervision Bari Havlik discussed, among other things, FINRA’s ongoing efforts to consolidate its Examination and Risk Monitoring Programs from three separate programs into a single one. The goal of the reorganization is to drive more effective risk monitoring by better identifying industry trends, promoting more examination consistency, eliminating duplication of examination efforts and creating a single point of accountability for the exams.

When the examination program consolidation was first announced in an October 2018 press release, FINRA noted that their examination program responsibilities were “divided among three different programs responsible for: business conduct, financial oversight and trading compliance. The  consolidation will bring those programs under a single framework designed to better direct and align examination resources to the risk profile and complexity of member firms. Among other benefits, FINRA expects the new structure to increase the efficiency and effectiveness of the program.”

Also, in the October 2018 press release, Cook noted, “Our Examination and Risk Monitoring program is central to our efforts to protect investors and guard the integrity of markets. After careful consideration and extensive feedback from internal and external stakeholders, we are moving toward a program structure that is based on the firms we oversee. By directing our expertise and resources in a more tailored way, we will become more effective at examining for compliance.”

Havlik added, “Implementing a unified program structure will help make us a more agile and risk-focused regulator while focusing on enhanced training and career opportunities for our staff.  We are evolving the program in a way that addresses specific feedback that we’ve received as part of FINRA360. This will be a significant undertaking that will continue through 2019, but our work is well underway. I look forward to keeping our stakeholders updated as we progress.”

The examination program integration is a result of FINRA360, FINRA’s  ongoing self-evaluation and improvement initiative. At the FINRA Conference, Cook noted that one of the main goals of the FINRA360 initiative is to provide tools to member firms to help them comply with the myriad of rules facing firms. A visit to FINRA’s website reflects the ongoing success of this effort, as FINRA provides numerous tools and templates to effectively assist member firms in complying with rules and enhancing supervisory oversight on topics ranging from OFAC screening to cybersecurity checklists. (See appendix below for a link to FINRA’s list of tools and checklists reflected on their  website, as well as FINRA’s examination priorities letter for 2019.)

At the FINRA Conference, for the first time, the business model categories resulting from the consolidation efforts were provided. Examination groups will be divided as follows:

Action items

First, contact your FINRA coordinator and discuss the new integrated examination program and how it will impact your firm. Second, review the many tools and checklists available on FINRA’s website to determine which ones can improve your firm’s compliance and supervisory programs. Finally, if you have not yet reviewed FINRA’s examination priorities letter for 2019, please do so ASAP, and identify any topics that are applicable to your firm’s business model and revisit your firm’s oversight in these areas.

Appendix

FINRA Website Tools

  • Anti-Money Laundering Template
  • Books and Records Requirements Checklist for Broker Dealers
  • Breakpoints Checklist and Worksheet
  • Breakpoints Interest Refund Calculator
  • Breakpoints Sample Written Disclosure Document
  • Broker/Check Link Requirements in Rule 2210, Tools and Resources for Complying with…
  • Business Continuity Planning Template
  • Compliance Calendar
  • Compliance Vendor Directory
  • Cybersecurity Checklist
  • Firm Renewal Report Job Aid
  • Merger, Acquisition, and Succession Checklist
  • New Account Application Template
  • Office of Foreign Asset Control (OFAC) Search Tool
  • Peer-2-Peer Compliance Library
  • Preferred Pricing Program
  • Report Center
  • Weekly Update Email Archive
  • Written Supervisory Procedures Checklist for Broker Dealers
  • Written Supervisory Procedures Checklist for Capital Acquisition Brokers

NOTE: Links to all of those tools are available here.


Ascendant, the professional consulting services arm of CSS, provides a full range of services and solutions for broker-dealers. For more information, click here


Subscribe to CSS Blog

CSS frequently publishes blog posts which are written by our team from their observations in the field, at conferences and through experiences with compliance professionals. These posts are designed to further knowledge and share industry best practices. Topics run the gamut, including Form ADV, cybersecurity, MiFID II, position limit monitoring, technology challenges and more. Complete and submit the brief form below to receive notifications when we publish new content.

Loading form...

Latest Content

Form CRS and Its Impact on State-Registered Advisers

While many investment advisers are starting to plan for Form CRS/Form ADV Part 3, one group of investment advisers can breathe a sigh of relief that this is a project that does not need to be on their ‘To Do’ list. As of now, no state regulator has adopted this disclosure document for state-registered advisers. … Continued

Effective Compliance Policies & Procedures and Annual Reviews: Meeting the Reasonably Designed Standards

Investment Advisers must perform an annual evaluation of the effectiveness of their compliance program. This starts with ensuring, maintaining and implementing reasonably designed policies and procedures. This ComplianceCast webinar covers the recent regulatory changes that may trigger a need to reevaluate your present policies. Who Conducts and How to Conduct the Annual Review Planning and … Continued

7 Reasons to Attend Our Scottsdale Fall 2019 Compliance Conference

If you’ve been considering joining us in Scottsdale for our Sept. 23-25 compliance event, here are seven reasons you should take the plunge now! The Best Mix of Informational & Educational Speakers – We just added OCIE’s Co-National Associate Director of Investment Adviser/Investment Company Examination Program Marshall Gandy to our stellar list of presenters. He joins ex-NFL star Merril … Continued