FINRA Releases Risk Monitoring and Examination Priorities Letter

Among the emerging issues identified in the letter as areas of focus in 2019 are:

• online distribution platforms;
• firms’ compliance with FinCEN’s Customer Due Diligence (CDD) rule; and
• firms’ compliance with their mark-up or mark-down disclosure obligations on fixed income transactions with customers.

In addition, FINRA will continue to review for firms’ compliance in important areas of focus identified in prior years, including sales practice risks; hiring and supervision of associated persons with a problematic regulatory history; cybersecurity; and fraud, insider trading and manipulation across markets and products.  FINRA may update its view on risks throughout the year, as well as provide observations on both concerns and effective practices relevant to some of these areas.

“This year’s Priorities Letter takes a new approach by highlighting those topics that will be materially new areas of focus for our risk monitoring and examination programs in the coming year,” FINRA CEO Robert Cook stated. “While we will continue to review and examine for longstanding priorities discussed in greater detail in past letters, we agree with the suggestion from many of our member firms that a sharper focus on emerging issues will help them better determine whether those issues are relevant to their businesses and how they should be addressed.”