A partner at Freeman, Freeman & Smiley, LLP, in Los Angeles, attorney Sylvia Scott leads the firm’s Securities Regulation Practice Group. A lawyer with tremendous exposure to matters involving securities regulatory compliance, Sylvia Scott’s focus as an attorney is on helping clients abide by the regulations of the Financial Industry Regulatory Authority, Inc. (FINRA).
FINRA issues the Regulatory and Examination Priorities Letter (the “Letter”) annually to serve as a guide for brokers and dealers on the regulatory concerns it will focus its examinations on that year.
Firms should use the Letter in applying changes to their business model, so as to be prepared in case of regulatory examinations. If the Letter has earmarked due diligence and long-term stability, a firm engaged in private placements should review its operations to strengthen controls in these areas.
With regard to large firms with multiple departments, the Letter should be circulated to the various departments. Afterwards, a meeting between the executive council and department representatives should be held to discuss the extent to which the Letter extends to the risky segments of each department and how they can remedy that. The modifications should be considerate and timely.
For smaller firms, similar measures should be taken, even if they have a much smaller size or fewer departments.