FINRA Focuses on Financial and Operational Priorities in Fifth Educational Podcast

FINRA issued the fifth in a six-part series of podcasts about its Regulatory and Examination Priorities for 2015. The podcast addressed the following financial and operational priorities: (i) funding and liquidity; (ii) sales of tax-exempt products; (iii) cybersecurity; and (iv) outsourcing. FINRA stated that it will examine these areas by:

• examining for integrity of mark-to-market in corporate, asset-backed and municipal-debt securities and looking at the supervisory controls surrounding the overall valuation process of funding and liquidity risk-management programs;
• examining for compliance in sales to customers involving tax-exempt or FDIC-insured products to ensure receipt of a tax-exempt income by customers rather than a "taxable substitute interest";
• reviewing firms' approaches to cybersecurity risk management by looking at governance structures, risk-management processes, how those assessment results are addressed, and compliance with digital storage rules pursuant to Exchange Act rule 17(a)-4;
• analyzing firms' due diligence and risk assessment on potential providers, as well as the supervision firms implement for the outsourced function;
• ensuring timely disclosable information reporting to investors by requiring firms to promptly disclose on those forms reportable events like regulatory actions, customer complaints, liens and criminal charges and providing a public-records review of all active, registered FINRA users;
• amending FINRA Main Supervision Rule Number 31-10 to require firms to do public-records checks when registering people to make sure their initial or transfer Form U4s are accurate and complete.

See: Transcript of FINRA Regulatory and Examination Priorities Podcast, Part 5; Listen to Podcast here.See also: FINRA Regulatory and Examination Priorities Letter. Related news: FINRA Focuses on Seniors, AML and Municipal Advisors in Fourth Podcast on Priorities (with Lofchie Comment) (July 27, 2015); FINRA Issues Podcast: Regulatory and Examination Priorities for 2015 - Part 3 (July 20, 2015); 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).