FINRA Publishes 2018 Report on Examination Findings

Second Annual Report Is the Latest Compliance Resource for Firms Resulting from FINRA360

WASHINGTON – FINRA today published its 2018 Report on FINRA Examination Findings, its second annual report detailing observations from recent exams of firms. The report is the latest resource FINRA makes available to firms as a result of its ongoing organizational improvement initiative, FINRA360.

The 2018 Report on FINRA Examination Findings includes a collection of FINRA’s observations from recent examinations that it considers worth highlighting because of their potential significance, frequency, and impact on investors and the markets. It describes practices the organization has observed to be effective in certain circumstances. Specifically, the report focuses on suitability for retail customers, fixed income mark-up disclosure, reasonable diligence for private placements and abuse of authority, followed by a summary of additional observations. FINRA also included within the report a case study that highlights examination findings from a targeted examination (sweep) of volatility-linked products.

“One of our core priorities is to provide firms with information that will help them more easily comply with rules and regulations, and this report aims to do just that,” said FINRA CEO Robert Cook. “We hope the observations within the Exam Findings Report enable firms to strengthen their own control environments and address potential deficiencies before their next exam.”

FINRA’s examination, surveillance, and risk monitoring programs play a central role in supporting FINRA’s mission of investor protection and market integrity, and a main component of those programs is FINRA’s examinations of broker-dealer firms. In addition to the individual reports firms receive following FINRA exams, firms have requested to learn more about what FINRA is seeing through its examination programs more broadly. In response – and as a result of FINRA360 – FINRA first published the Report on Examination Findings in December 2017 as a resource firms can use to improve their compliance and supervisory programs.

The 2018 Report on FINRA Examination Findings adds to the collection of publications FINRA has made available as guidance to firms on a variety of issues, and joins FINRA’s report cards as another resource firms can use to gauge their compliance controls against the rest of the industry’s. In addition, FINRA publishes an annual Regulatory and Examination Priorities Letter to highlight issues of importance to FINRA's regulatory programs.

About FINRA

FINRA is a not-for-profit organization dedicated to investor protection and market integrity. It regulates one critical part of the securities industry – brokerage firms doing business with the public in the United States. FINRA, overseen by the SEC, writes rules, examines for and enforces compliance with FINRA rules and federal securities laws, registers broker-dealer personnel and offers them education and training, and informs the investing public. In addition, FINRA provides surveillance and other regulatory services for equities and options markets, as well as trade reporting and other industry utilities. FINRA also administers a dispute resolution forum for investors and brokerage firms and their registered employees. For more information, visit www.finra.org.