The Financial Industry Regulatory Authority has released its 2023 report on its examination and risk monitoring program, which is aimed at helping member firms bolster their compliance efforts.
In a news release, FINRA said the comprehensive report reflects its commitment to providing greater transparency to firms and the public about its regulatory activities and the integration of its regulatory operations programs.
24 topics relevant to the securities industry are covered in the report. FINRA said the findings are intended to provide key insights into regulatory obligations, findings and observations from recent oversight activities, effective practices and additional resources.
“This report represents a holistic approach to FINRA regulation, leveraging information from across our regulatory operations to provide member firms with information to help them enhance their core compliance programs,” said Greg Ruppert, FINRA’s Executive Vice President of Member Supervision. “The report addresses topics that remain perennially important, with updates to reflect evolving risks, industry trends and findings from FINRA’s recent oversight activities. This year, we have also increased the breadth of the report’s coverage by adding several new topics focused on insights originating in our market surveillance activities.”
Four new topics were covered in this year’s report: manipulative trading, fixed income – fair pricing, fractional shares, and regulation SHO. As part of FINRA’s focus on protecting investors and safeguarding market integrity, there is also a section on financial crimes. The topics in that section include money laundering, fraud and sanctions, and cybersecurity. The authority noted that the increasing frequency and sophistication of cybersecurity threats is one of the most significant risks facing many customers and firms. A Cyber and Analytics Unit has been established to enhance the ability to address the threat.
The report also highlights the risks posed by the increasing use of mobile apps. FINRA observed potential issues with some mobile apps, including those that do not adequately distinguish between products and services of the broker-dealer and those of affiliates or third parties.
Financial professionals who work for broker-dealers, RIAs or other financial services companies operate in a highly regulated industry that is overseen by the SEC, state regulators and other self-regulatory organizations such as FINRA and various exchanges. The attorneys at Lewitas Hyman understand this because we were formally senior attorneys in the SEC’s Division of Enforcement. If you are the subject of a regulatory proceeding, contact us at (844) 651-2641 or through our online contact form for a free consultation.