FINRA Podcast: Regulatory and Examination Priorities 2013 - Part 2
This is the second podcast on FINRA's 2013 regulatory and examination priorities, as addressed in FINRA's annual letter to firms. See the outline below.
Cybersecurity
- FINRA is concerned with the integrity of sensitive customer data and the safety of the industry from digital threats.
Preventing Microcap Fraud
- High-risk, speculative microcap and low-priced over-the-counter securities are regularly marketed to investors by phone, email and mail;
- Firms should check that their policies and activities related to microcap securities are compliant with FINRA rules and federal securities laws, e.g., heightened supervision of employees with outside business activities in microcap companies or those involved in trading microcap securities;
- FINRA is concerned about the sale and marketing of private placement securities;
Anti-Money Laundering
- FINRA continues to focus on all aspects of AML, from the most basic to the most complex, e.g., the increase in foreign currency conversion transactions;
Automated Investment Advice
- The use of software solutions to dispense automated investment advice to retail clients has grown;
- Although this advice is helpful to investors, in some cases it may not adequately gather the necessary information for an investment profile or it may fail to match securities or portfolios properly with the investors' risk appetites;
Branch Office Supervision
- Firms must have a robust, supervisory structure and must ensure that their branch office inspection programs are reasonable and appropriate to the scale and scope of activities/risks of the branch;
Insider Trading
- Top regulatory priority for FINRA; and
- Firms must vigilantly safeguard material, nonpublic information and periodically assess information barriers and risk controls to ensure they are adequate, e.g., employee training on nonpublic information use and handling.
Listen to Podcast in full here.See also: Regulatory and Examination Priorities 2013 - Part 1.