2016 FINRA Regulatory and Examinations Priorities Letter

Financial Industry Regulatory Authority pic
Financial Industry Regulatory Authority
Image: finra.org

A partner at Freeman, Freeman, and Smiley, LLP, Sylvia Scott is an attorney based in Los Angeles, California. Recognized in 2015 as a South California Super Lawyer, Sylvia Scott advises clients on how to follow the Financial Industry Regulatory Authority’s (FINRA’s) annual Regulatory and Examinations Priorities Letter.

FINRA’s annual Regulatory and Examinations Priorities Letter offers brokerage companies a guide to concerns the regulator will be paying close attention to that year.

FINRA’s 2016 Regulatory and Examination Priorities Letter was issued on January 5. It is the regulator’s 11th annual priorities letter. Existing and emerging risks outlined in this year’s letter include:

1) Interest rates. Giving the recent hiking of interest rates, FINRA will be concerned with interest rate-sensitive customer offerings by individual firms.

2) Culture, ethics, and conflicts. FINRA recognizes that each firm has its own culture and that such a culture has a profound impact on the way the company conducts its operations. FINRA will this year seek to understand each firm’s culture with regard to five indicators: how control functions are valued, whether control breaches are condoned, whether supervisors act as role models, whether the company routinely carries out risk assessments, and whether nonconforming subcultures are identified and addressed.

3) Liquidity. Unchecked liquidity has contributed to many firms’ failures. FINRA will this year look at firms’ contingency funding and effective practices.


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