In its annual Examination and Risk Monitoring Program Report, FINRA covered twenty-one different topics related to a firm’s core compliance responsibilities. FINRA added five new topics since last year’s report. The new topic areas include:
- 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.
For covered topics, the Report (i) identifies the relevant rules, key considerations for member firms’ compliance programs, and noteworthy findings from recent examinations, and (ii) outlines effective practices that FINRA observed during its oversight while providing resources that the member firms may find helpful when reviewing their procedures and fulfilling their compliance obligations. Some of the areas of focus highlighted in the Report were:
- “FINRA’s initial findings from 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 Special Purpose Acquisition Companies;
- 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.”
FINRA stated that the Report is intended to be an up-to-date, evolving resource or library of information for firms.
Cadwalader Wickersham & Taft LLP
February 10 2022