Cooperating with the FINRA and SEC Examiners

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

A Los Angeles attorney, Sylvia Scott earned her juris doctor from the University of California Los Angeles, School of Law. A partner at Freeman, Freeman, and Smiley, LLP, Sylvia Scott is an attorney representing brokers and financial advisors.

The Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC) carry out routine examinations to investigate regulatory compliance within the companies under their jurisdiction. For securities brokers, therefore, regulatory examinations are not a rare occurrence, but rather occur at regular intervals.

Cooperating with the regulator’s examiner during these examinations is important. Some of the ways the firm can do this is by:

1) Designating a point person
This is a principal at the firm who will be directly responsible for interfacing with the examiner. For much larger firms, an entire department may be tasked with liaising with the examiner to facilitate a smooth examination.

2) Common courtesies
These include providing the examiner with adequate work space to conduct the examination. In the course of interaction, all employees of the firm should be responsive and courteous.

3) Maintain good communication
Do not lie to the regulators. Address any previous miscommunication, making sure to correct any issues that arise afterwards. Do not give the impression that you are out to frustrate or delay the examination.

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