FINRA Issues Podcast: Regulatory and Examination Priorities for 2015 - Part 3

FINRA issued the third in a six-part series of podcasts about its Regulatory and Examination Priorities for 2015. The third podcast examines FINRA's sales practice priorities. These priorities include:

New Supervision Rules

• Effective as of December 1, 2014, the new rules will change supervision requirements, including those that pertain to the offices of supervisory jurisdictions and the inspection of non-branch offices.

Investor Wealth Events

• FINRA examiners will be focusing on whether firms have proper controls in place for investor wealth events.

Individual Retirement Accounts ("IRAs")

• FINRA noted that it would be false or misleading to imply that a retiree's only choice for an IRA is to roll over plan assets into one that is sponsored by the firm. Additionally, FINRA mandated that any communications detailing IRA fees must be fair and balanced, and that a firm cannot claim that an IRA is "free" or carries no fee when the investor will incur costs related to the account, its investments or both.

Excessive Trading and Concentration Controls

• FINRA stated that its examiners will focus on firms' supervisory processes, systems and controls for monitoring excessive trading and product concentration. FINRA added that it also will focus on the criteria for exception reports used by firms and how adequately firms follow up on those exceptions.

Private Placements

• FINRA reported that it found a number of instances in which a contingency offering's terms were amended but customers were not offered the option of withdrawing their investments.

High-Risk and Recidivist Brokers

• FINRA reported that it will expand its use of data mining and analytics, and will target examinations, expedited investigations and enforcement actions specifically in order to find and remove unscrupulous registered representatives of the securities industry. In that regard, FINRA said that it will be reviewing firms' due diligence on prospective hires.

See: Transcript of Podcast; Listen to Podcast here.See also: FINRA Regulatory and Examination Priorities Letter.Related news: FINRA Podcast: Regulatory and Examination Priorities for 2015 - Part 2 (July 7, 2015); FINRA Podcast: Regulatory and Examination Priorities for 2015 - Part 1 (June 29, 2015).