FINRA Publishes 2022 Report on Exam and Risk Monitoring Program

Includes Initial Findings From Reg BI Exams; Highlights Emerging and Ongoing Regulatory Topics

Washington, D.C. – FINRA today published its 2022 Report on FINRA’s Examination and Risk Monitoring Program to provide insights from FINRA’s oversight programs to FINRA member firms. The 70-page Report covers 21 different topics—including five new subjects—relevant to an evolving securities industry.

“Today’s securities industry landscape is highly dynamic in terms of business models, technologies, products and compliance practices,” said Greg Ruppert, Executive Vice President, Member Supervision. “This Report looks at these significant changes through the lens of FINRA’s commitment to investor protection and market integrity, so that firms’ compliance programs can benefit from our findings about emerging and ongoing issues.”

The new sections among the publication’s 21 topics are:

• Firm Short Positions and Fails-to-Receive in Municipal Securities;
• Trusted Contact Persons;
• Funding Portals and Crowdfunding Offerings;
• Disclosure of Routing Information; and
• Portfolio Margin and Intraday Trading.

Focus areas highlighted in the Report include:

• FINRA’s initial findings from its Reg BI and Form CRS reviews;
• firms’ compliance with certain regulatory obligations related to:
  • the Consolidated Audit Trail,
  • best execution and
  • Rule 606 of Regulation NMS;
• problems with some mobile apps’ communications with customers and firms’ supervision of activity on those apps, particularly controls around account openings;
• firms’ compliance with their regulatory obligations with securities activities involving SPACs;
• the increasing number and sophistication of cybersecurity threats faced by firms and their customers; and
• firms’ communications and disclosures made to customers regarding complex products.

For the first time, the publication emphasizes new material in sections that have appeared in previous iterations, as well as findings that are particularly relevant for firms in their first year of operation. As in prior years, FINRA will also adapt its areas of focus throughout 2022 to address emerging regulatory concerns and risks for investors that may arise throughout the year.

The Report identifies the applicable rules and related considerations for member firm compliance programs, summarizes noteworthy findings from recent examinations, outlines effective practices that FINRA observed, and provides additional resources that may help member firms fulfill their compliance obligations.

Many of the areas addressed in the Report represent ongoing core compliance responsibilities that are reviewed as part of FINRA’s regular risk-based exam program each year. Where applicable, FINRA will continue to enhance the information in these areas, as well as add new ones, to address changes that may affect how regulatory obligations are fulfilled.

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.