FINRA Is Stepping Up Reg BI Actions, Enforcement Chief Says

By Melanie Waddell

News April 22, 2024 at 01:59 PM

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Bill St. Louis, FINRA Head of Enforcement

The Financial Industry Regulatory Authority has more enforcement cases related to Regulation Best Interest "in the pipeline," as the disciplinary actions "have been increasing," Bill St. Louis, head of FINRA enforcement, said in a recent blog post.

"We have brought cases involving the Customer Relationship Summary form (Form CRS), excessive trading, complex products and variable annuities, with more in the pipeline," St. Louis said.

Targeted exams, or sweeps, being conducted by FINRA, St. Louis continued, "may be referred to enforcement, and we want to prioritize those related cases to ensure they are concluded in a timely manner."

For instance, FINRA recently brought its second settlement in a case that resulted from its sweep on social media influencers and customer acquisition.

"This is of specific importance since so much of the public receives investing advice from social media," St. Louis stated.

As to the Consolidated Audit Trail, St. Louis noted that while "the overwhelming majority of firms have successfully complied" with their CAT reporting obligations, "there are still some CAT cases" in FINRA's pipeline.

Those cases include: "instances of millions if not billions of late or inaccurately reported order events, situations where firms are aware of CAT problems and do not reasonably respond to red flags, failure to implement a reasonable CAT system for several years, or when firms limit their supervisory reviews to data fields rejected by CAT," St. Louis explained.

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