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FINRA enforcement chief outlines plans for protecting investors and markets

On Behalf of | Apr 24, 2024 | FINRA Compliance

The head of enforcement for the Financial Industry Regulatory Authority discussed his key objectives aimed at protecting investors in  a recent blog post, AdvisorHub reports.

Bill St. Louis, Executive Vice President and Head of FINRA Enforcement, emphasized that FINRA helps ensure that everyone can participate in the securities markets with confidence through the authority’s oversight of member firms’ compliance with FINRA and Municipal Securities Rulemaking Board rules, and federal securities laws and rules.

He laid out four main objectives for enforcement:

-Protecting investors and markets

-Enhancing the transparency of FINRA Enforcement to external stakeholders

-Increasing our efficiency and reducing the time to complete cases

-Improving collaboration across FINRA’s regulatory operations.

St. Louis, who assumed his position last August, said that FINRA focuses its resources on the most impactful areas for investors and markets, particularly cases that involve fraud and misconduct targeting senior and vulnerable adults, customers directly harmed by firms or brokers, recidivist behavior by bad actors, and firms and brokers who have committed previous violations.

“FINRA confronts firms and brokers with a history of misconduct to prevent them from harming investors and compromising the integrity of the financial markets,” said St. Louis.  “Where appropriate, we seek to bar brokers who have engaged in egregious misconduct from associating with FINRA member firms.”

He added that sanctions imposed on recidivists should be more severe because a recidivist has already failed to comply with FINRA’s rules or securities laws.

St. Louis also noted that FINRA has been stepping up its enforcement of the Securities and Exchange Commission’s Regulation Best Interest, which establishes a “best interest” standard of conduct for broker-dealers when they make a recommendation to a retail customer of any securities transaction or investment strategy involving securities.

“Our department’s Reg BI-related disciplinary actions have been increasing, with the expulsion of two firms for misconduct that included Reg BI violations,” St. Louis said. “We have brought cases involving the Customer Relationship Summary form (Form CRS), excessive trading, complex products and variable annuities, with more in the pipeline.”

Other areas of focus, he said, were enhancing the transparency of FINRA enforcement to help member firms gain a better understanding of how the investigative process works; increasing the efficiency of the enforcement process in order to reduce the amount of time it takes to complete cases; and improving collaboration across FINRA’s regulatory operations, including exams, investigations, surveillance, disciplinary actions, and other regulatory activities.

St. Louis concluded by saying, “We are confident that by diligently pursuing the objectives and keeping our mission of investor protection and market integrity top of mind, we can achieve our goals and collectively do what is right for investors and the market.

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