On January 4, the Financial Industry Regulatory Authority published its Annual Regulatory and Examinations Letter (Priorities Letter), which outlines the key areas on which FINRA intends to focus during its 2017 exam period. The areas of emphasis set forth in the Priorities Letter are based on observations from FINRA’s regulatory programs and additional input from investor advocates, member firms and other regulators.
The Priorities Letter noted that FINRA will continue focusing on issues related to compliance, supervision and risk management. In particular, key areas of emphasis for 2017 include, but are not limited to, the following: (1) high-risk and recidivist brokers; (2) sales practices (e.g., the excessive and short-term trading of long-term products and the outside business activities and private securities transactions of registered representatives); (3) financial risks (e.g., liquidity risk and financial risk management); (4) operational risks (e.g., cybersecurity and supervisory controls testing); and (5) market integrity (e.g., manipulation and trading examinations).
The Priorities Letter further noted that FINRA will initiate in 2017 electronic, off-site reviews to supplement traditional on-site examinations of member firms. Such reviews will entail targeted and limited information requests that will then be analyzed off-site. FINRA will only conduct such off-site reviews on a select group of member firms that are not currently scheduled to be subject to an on-site exam in 2017.
A copy of the Priorities Letter is available here.