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On January 4, 2017, the Financial Industry Regulatory Authority (“FINRA”) released its 2017 Regulatory and Examination Priorities Letter (the “Letter”). Within the Letter, FINRA identified new and recurring challenges for broker-dealers in the following categories:
FINRA also announced that, for the first time, it will be conducting electronic off-site reviews to supplement its examination program. FINRA will conduct these reviews on a limited number of firms that are not scheduled for a cycle exam in 2017. These exams will focus on the priorities listed in the Letter.
High-Risk and Recidivist Brokers
FINRA first included this item in its 2015 Exam Priorities Letter. Since then, the agency has conducted surveillance and exams of “high-risk” registered representatives. For 2017, FINRA will take a comprehensive approach to high-risk brokers in three areas:
FINRA generally includes some element of sales practice in its annual priorities letter. For 2017, FINRA has identified the following areas of focus:
FINRA reminds firms of their customer-specific suitability requirements regarding the above products.
FINRA has also highlighted two areas of weakness for many firms:
Examination priority letters have been an essential source to guide broker-dealers on significant areas of regulatory risk since FINRA began publishing these notices. This year FINRA has addressed several issues which have been noted in previous years, as well as new priorities. We encourage all FINRA member firms to review the 2017 letter in its entirety to determine how the topics might affect their compliance measures.
Please contact Dee Stafford for more information or guidance regarding the implications of FINRA’s 2017 Regulatory and Examination Priorities Letter.