FINRA CEO Calls for Greater Collaboration to Combat Financial Fraud

FINRA President and CEO Robert Cook urged regulators, financial firms and law enforcement to collaborate on tackling the escalating threat of financial fraud.

At a FINRA Foundation event, Mr. Cook said that investors lost over $10 billion in 2023, nearly half of which was from fraud. He asserted that technology was enabling bad actors to operate across borders and outside of regulatory oversight. He highlighted FINRA's (i) increased focus on real-time information sharing and (ii) issuance of cyber-focused and general alerts. Mr. Cook emphasized that the fight against fraud requires more active collaboration stating that "delays in sharing critical information can be costly in [today's] fast-paced fraud [environment]."

Mr. Cook also touched on the growing risks posed by social media and unregistered "finfluencers" who dispense investment advice. He said that half of Gen Z investors rely on social media platforms like YouTube for financial advice, which leaves them vulnerable to misinformation and fraud.

Mr. Cook discussed the creation of a unified portal to simplify how investors verify financial professionals' credentials, noting that databases like FINRA's BrokerCheck® and the SEC's Investment Adviser Public Disclosure system operate independently. Mr. Cook argued that investors should not have to check "several relevant websites to get the full picture" just to see if someone is legitimate.

Mr. Cook emphasized the importance of communication among regulatory bodies to strengthen public awareness and prevent fraud. He suggested that when agencies "speak with one voice," they're louder, they're clearer and they're more effective.