The Financial Industry Regulatory Authority is highlighting the measures it has taken recently to strengthen its examinations program in order to make it more efficient and effective.
In a recent blog post on the authority’s web site, FINRA’s Executive Vice President, Head of Examinations Jim Reese noted that exams are a cornerstone of FINRA’s oversight of member firms for compliance with securities laws and FINRA rules. About 1,000 member firms are inspected each year to address issues before they might harm investors, members, or markets.
As part of the FINRA Forward initiative, several changes were introduced aimed at making exams more transparent, efficient, and risk-based while allowing the authority to focus its resources on the highest risks. The reforms include the following:
-More transparency for members throughout the exam process.
“In response to member feedback, in early 2026, we began contacting members with exams scheduled for this year with advance notice of the quarter in which their exam is expected to be announced,” Reese wrote. “This gives members more time to prepare and allocate resources. With two recently published resources, we also are giving members more insight into how we assess risk, categorize member firms, and approach our exams.”
FINRA said that it evaluated prior scheduling patterns before implementing the change to ensure firms could reasonably rely on the projected exam timing.
-Adjustments of examination schedules to better account for a firm’s risk profile.
Frequency of past exams was based on various risk factors, with four years being the longest interval. After a review of the data, it was determined that certain lower-risk firms will now be examined every six years, while remaining subject to ongoing risk monitoring to determine whether more frequent examinations are warranted. FINRA said this approach frees up resources to deploy against more significant risks to investors and markets.
“We have also refined our approach for initial examinations of newly approved member firms,” Reese added. “Broadly, FINRA is mandated by federal securities laws to conduct an initial exam within the first six months after a firm is approved for membership. We are now drawing more heavily on information gathered during the membership application review process to better tailor the scope of a firm’s first exam to focus on higher-risk areas.”
Requests for data have also been streamlined by leveraging information already available. Total external data requests in 2025 were down 12% over the prior year, while policy-driven initial trade blotter requests dropped by more than 50% in the same period.
-Expanding the exchange of information between firms and FINRA examiners.
Members now have the option to receive preliminary findings in writing throughout the examination, allowing them to address issues or provide additional information earlier in the process, which can be considered in the ultimate disposition of any findings.
Since this began in March, the majority of members who specified their preference have requested preliminary exam findings. “Members also may choose to continue receiving a consolidated report of all findings at the exam’s conclusion”, Reese wrote. “After the exam, the risk monitoring analyst remains a resource to continue conversations about actions the member is taking to address issues.”
-Reorganization of core regulatory functions.
FINRA said the exam reforms coincide with a move to merge its risk monitoring and intelligence, surveillance, examinations, investigations and enforcement into an integrated Regulatory Operations single reporting structure. The reorganization is aimed at promoting more sharing and coordination of information regarding member firm issues.
“Our examination teams have long worked hand in hand with our risk monitoring teams to understand the risks facing individual member firms and appropriately scope exams,” Reese wrote. “The new Regulatory Operations structure builds on this partnership.”
He added that future plans for examinations include automated processes designed to shorten timelines, reduce broad and labor-intensive data requests, and minimize operational disruption. That effort will include harnessing the capabilities of artificial intelligence in various ways, including speeding the analysis of Written Supervisory Procedures explaining a member firm’s protocols.
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