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Securities Compliance Sentinel Analysis of cutting-edge securities industry issues

So What Do FINRA’s Disciplinary Statistics Mean For You?

Posted in Broker-Dealer Regulation, FINRA Compliance, FINRA Enforcement, Registered Representatives

As noted in a report by the Sutherland Asbill firm, although over the first six months of 2013 FINRA has brought nearly the same number of disciplinary cases as the same period in 2012, fines are down significantly.  In addition, FINRA’s areas of focus have also changed.  So what does this mean for you?

For one, most of the larger cases that arose out of the financial crisis of 2008 have worked their way through the system.  This would account, in all likelihood, for the downward swing of the amount of fines. 

Considering that the number of cases remains essentially the same means that FINRA is just as active now as it was in 2012.  In other words, it remains critical for you to project the culture of compliance at your firm, which can only help you avoid disciplinary actions.

The types of cases also show somewhat of a shift in FINRA’s focus.  In order of the number of cases, FINRA has focused on the following:pointing.jpg

  1. Municipal securities;
  2. Electronic communications;
  3. Mutual funds;
  4. Suitability; and
  5. Short selling.

In light of these areas of focus, now is as good a time as any to review your policies and procedures regarding the products noted above if they are sold or underwritten by your firm.  Similarly, you should focus on your electronic communications policies and procedures, including the monitoring of such communications.  Finally, attention must always be given to ensure you are only recommending suitable investments to your customers.

By staying on top of these areas, hopefully you will avoid FINRA’s attention.

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