FINRA Expands Exam Program with Thematic Reviews and Subject Matter Experts

Members of FINRA's Exam Program highlighted the introduction of thematic reviews to address specific areas of heightened risk.

During an episode of FINRA Unscripted, Michael Solomon, executive vice president of Examinations; and Tom Mellett and John Martino, vice presidents of FINRA's Firm Group Examinations, reported that FINRA integrated all examinations, including exam programs on FINRA, SEC, MSRB, and exchange rule compliance, under a single team.

Mr. Solomon highlighted the introduction of thematic reviews which are designed to focus on specific areas where there may be "heightened risk" or insufficient firm focus. He said thematic reviews allow us to compare controls and procedures across firms more quickly and consistently, offering a more nimble way to gather information. Mr. Mellett explained that, unlike traditional sweep exams, where there's an indication of material risk, thematic reviews "are about learning."  Mr. Solomon said that during these thematic reviews, FINRA would conduct extensive information-gathering, including interviews with both business personnel and those involved in designing and controlling specific products or business areas. He said that these interviews would be "informal" and not part of an enforcement investigation.

FINRA also reported that it has established guidance groups composed of experts in areas such as Regulation Best Interest and cybersecurity. FINRA said that these groups provide support to exam teams when potential exceptions or violations are identified, helping to determine whether an issue should be cited as an exception, considered for enforcement referral, or if further information is needed from the firm.