FINRA May Merge Securities Enforcement Programs

The Financial Industry Regulatory Authority is contemplating on joining two of its enforcement programs to streamline its processes.

At the moment, FINRA has two separate enforcement systems, one in its member regulation group, which focuses on their employees and member companies, and another in its market regulation group, which manages over-the-counter trading. However, as FINRA head Robert Cook stated recently, “We are one team, and we all are responsible for FINRA’s success."

The possible merger is part of an on-going multi-year initiative called FINRA360, wherein the self-regulatory organization is conducting a whole review of day to day functions and programs, with input from both inside as well as outside the corporation.

Remark Request

As part of the review, FINRA also is taking a closer look at its rules for private securities transactions and business activities happening outside of its firms. The rules were made to safeguard investors from potentially problematic activities unknown to the company, but that might be perceived by the investing public as a portion of the company’s business, FINRA said.


Another area that FINRA is focusing on is the impact of fintech tools and related business models on investors and broker-dealer businesses.

Shortly, the self-regulatory organization expects to launch a FINRA Innovation Outreach Initiative to, according to Mr. Cook, ”engage with those in the securities industry seeking to come up with or use other innovations along with new financial technology applications." The initiative will help FINRA better comprehend these inventions along with its ability to cultivate a collaborative environment for productive interactions with businesses operating in this space.

Report Cards for Broker-Dealers

FINRA is also continuing its crackdown on poor practices at broker-dealers. A year ago, it started handing out cross-market report cards to brokers, especially noting manipulative activities.

Because manipulative action can be very challenging for companies to detect, FINRA is currently alerting its members directly whenever its surveillance programs flag a unusual or erratic trading patterns. “These new report cards do not reflect conclusions that violations have happened," said Mr. Cook. "Instead, they signal possible problems that a company needs to review."

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