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Should You Breath Easy Because FINRA Enforcement Actions And Fines Decreased In 2013

Posted in Broker-Dealer Regulation, Conflicts of Interest, FINRA Compliance

The Sutherland Asbill firm recently released its report regarding FINRA enforcement actions. In all, the report reflects that enforcement actions and fines decreased over the past year.  So what does this all mean?

According to the firm, this could be a reflection of the larger financial crisis cases having worked their way through the system. One statistic that particularly caught my attention, however, was the decrease in the number of suitability cases; according to the report, a 38% drop.

Does this mean that FINRA is less focused on suitability cases? Not in the least.money.jpg

According to FINRA, suitability remains one of its primary exam priorities in 2014. FINRA has stated that it is particularly focused on suitability when it comes to more complex products. FINRA is also focusing on those situations where there is a financial incentive for the recommendation of a particular investment. Examinations will focus on how material risks are being disclosed.

Don’t take the statistics lightly when it comes to suitability. Make sure your registered representatives are doing their job when making recommendations, especially when it comes to sophisticated and incentive-based products. Otherwise, you may contribute to an increase in suitability statistics next year.

 * photo from freedigitalfotos.net