Retail fraud and high-risk brokers top the Financial Industry Regulatory Authority's just-released 2018 Regulatory and Examination Priorities Letter, with the self-regulator also planning to usher in this year a revamped exam program as well as enhanced "information-sharing" with firms during exams.
"The coming year will bring both continuity and change in FINRA's programs," FINRA CEO Robert Cook wrote in a note to firms that accompanied the Priorities Letter.
"The continuity comes, first and foremost, in our unwavering commitment to our mission: protecting investors and promoting market integrity in a manner that facilitates vibrant capital markets. Change will come in how we accomplish that mission."
Besides high-risk firms and rogue brokers, operational and financial risks — including technology governance and cybersecurity — and market regulation will be areas of focus.
FINRA's areas of priority in 2018 include:
- sales practice risks, including recommendations of complex products to unsophisticated, vulnerable investors;
- protection of customer assets and the accuracy of firms' financial data; and
- market integrity, including best execution, manipulation across markets and products, and fixed income data integrity.
Cook noted that the exam priorities letter — alongside FINRA's 2017 Examination Findings Report — "serves as a resource for broker-dealers to enhance their compliance, supervisory and risk management programs and to prepare for their FINRA examination."
On tap for this year are "additional changes to improve our examination program as we continue to implement a risk-based framework designed to better align examination resources to the risk profile of our member firms," Cook said.
