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Securities Compliance Sentinel Analysis of cutting-edge securities industry issues

Did You Know That Some Of Your Products Require Heightened Supervision

Posted in Broker-Dealer Regulation, Financial Industry Trends, FINRA Compliance, FINRA Enforcement

buyholdsell.jpgIn a recent speech, FINRA CEO, Richard Ketchum, told broker-dealer compliance officers that, although firm compliance programs have improved, there must be heightened supervision when it comes to complex products.  In light of these comments, you must assume that the supervision over the sale of complex products will be a focus of your next examination.

Ketchum noted certain products that should be subject to heightened supervision.  Those products include: structured products, closed-end funds, private REITs, private placements and “exotic ETFs.  If you offer any of these products, now is the time to revisit your supervision over their sale.

You may ask why such heightened supervision is required.  According to FINRA, it does not believe that many in the investing public understand these products, and that there is a lack of available information about some of them.

Take Ketchum’s comments as a warning.  Revisit your supervision if you sell complex products, or face certain exceptions on your next examination.