The Culture of Compliance and FINRA

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

Sylvia Scott is an attorney and partner at the Los Angeles law firm Freeman, Freeman & Smiley, LLP. Named a Super Lawyer in multiple years, Sylvia Scott has also authored articles for legal journals on topics related to compliance with FINRA regulations in conjunction with her role as an attorney.

Each year, FINRA releases its Annual Regulatory and Examination Priorities Letter in order to disseminate information among businesses about important issues as they relate to compliance with FINRA’s regulatory programs. In 2016, one of the main emphases of FINRA’s letter was a stringent focus on firm culture. FINRA asserted that it would put focus on determining if examined firms supported a “culture of compliance.”

In order to facilitate a culture of compliance, businesses are expected to exhibit a commitment to five core facets of operations. These operations encompass such issues as whether or not employees abide by control functions, whether leaders tolerate the violation of control breaches, and how much effort a company puts into seeking out instances of risk and compliance. Additionally, employees in positions of power must display a strong commitment to a compliant firm culture for the benefit of their teams. Sub-cultures within the corporate structure must also be monitored to make sure that operations fall under direct conformity with the company’s overall commitment to compliance.

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