FINRA issued the fourth in a six-part series of podcasts about its Regulatory and Examination Priorities for 2015. The fourth podcast discusses FINRA’s sales practice priorities and sets out issues for firms to consider when drafting compliance plans and making compliance decisions.
- FINRA noted that many firms have developed specific internal guidelines for strengthening suitability oversight and providing training on the needs of senior investors. FINRA urged firms to review their senior investor procedures and emphasized that protecting senior investors requires more than compliance with FINRA and federal securities regulation.
- FINRA said that it will review firms’ surveillance systems for cash management accounts and determine whether those systems are adequately designed to identify suspicious activity. FINRA stated that some firms have not sufficiently monitored the delivery versus payment and receipt versus payment accounts of foreign financial institutions for suspicious activity or acceptable securities compliance.
- FINRA stated that firms’ customer trading surveillance should be tailored to the anti-money laundering risks that are inherent in their business liens, products and customer bases. FINRA also noted that examiners must check whether firms have systems to monitor red flags for suspicious customer trading activity.
Municipal Advisors in Securities
- FINRA said that it will focus on SEC and MSRB municipal advisor requirements for the proper application of exclusions, exemptions and potential unregistered activity. FINRA added that it also will focus on firms that sell municipal bonds for less than the required minimum denomination.
Lofchie Comment: This fourth podcast may be distilled into three issues: (i) the treatment of seniors; (ii) anti-money laundering fines and penalties that have hit firms hardest (in terms of punitive settlements); and (iii) the new regulatory scheme for municipal advisors. It is imperative for firms to attend to these issues.