Legal Alerts

Annual FINRA Conference: Takeaways


FINRA reviewed its exam priorities this year at the Annual FINRA Conference. Among them are:

  • Looking into the amount of current regulation
  • Review and analysis of comments on FINRA’ intended roll out of its Comprehensive Automated Risk Data System (CARDS) Proposal
  • Firm due diligence and practices in hiring registered representatives
  • Recruitment and compensation practices
  • IRA rollovers and potential conflicts/disclosures
  • Limited Corporate Financing Broker Proposal
  • Social Media
  • Retrospective Rule Review
  • Outside Business Activities 
  • Brokercheck Hyperlink Proposal

From the enforcement side, FINRA has and will continue to be taking a hard look at structured and complex products/alternative investments, including residential mortgage backed securities and commercial mortgage-backed securities, collateralized mortgage and debt obligations, non-traded REITs, exchange-traded products and over-concentration in complex products. Materials provided at the conference included a laundry list of cases brought by enforcement on one or more of these various issues. Cases concerning microcap -- fraud and anti-money laundering were also noted including case focusing on suspicious transactions/high risk customers, master/sub accounts, and use of foreign finders. Rounding out the list of enforcement trend topics were other perennial hot issues including supervision, arbitration (cases involving restricting ability to participate in class actions and limiting the ability to arbitrate claims), research reports and material non-public information, and fixed income.

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