One area of focus for FINRA has been on recidivist registered representatives. A recidivist is an associated person who has repeated rule violations or customer complaints of a specific nature.

FINRA has used a risk-based approach in order to be proactive to identify the bad behavior that these undesirable registered representatives tend to display. In doing so, FINRA has developed systematic way to review data for repeated patterns of certain bad conduct.pointing.jpg

Once FINRA identifies these individuals, FINRA will focus on them and their supervisors. There is a particular focus on branch offices for those individuals who act in a manner inconsistent with firm practices.

FINRA then undertakes to remove the repeat offenders from the industry. If you follow FINRA disciplinary matters, it is apparent that FINRA is seeing this process through and removing repeat offenders from the industry.

Why should you care? For one, it should give you the impetus to review your own ranks. Is there someone who has had repeat issues? If so, what are you doing about it; nothing, heightened supervision, termination, etc.

Firms have a choice. They can help flush out bad seeds in their firms, or have FINRA do it for them. If you take the later course, you are likely to be the focus of FINRA as well. Be proactive; remove recidivists from your ranks.

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