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On Thursday, July 27, regulators and industry professionals gathered in Washington, D.C. to discuss the current regulatory environment, cybersecurity, and other hot topics at the SEC and FINRA’s 2017 National Compliance Outreach Program for Broker-Dealers. The panelists, including SEC Commissioner Michael Piwowar, FINRA President and CEO Robert Cook, and Susan Axelrod, the Executive Vice President of Regulatory Operations, FINRA, particularly emphasized their agencies’ focus on identifying brokers who may pose a high risk to investors, and said that both the SEC and FINRA will be increasing their examination and enforcement activities relating to high-risk and recidivist brokers. Piwowar said that the SEC will be “relentless” in rooting out such individuals through exams and enforcement, and encouraged members of the brokerage industry to alert regulators to potential bad actors and the firms that attract them. Axelrod similarly noted that FINRA will devote significant attention to firms’ hiring and monitoring procedures, including whether firms adequately diligence their candidates and establish appropriate supervisory and compliance controls. She said the agency will look closely at firms hiring brokers with compliance disclosures, or firms that have “clusters” of reps that seem to move together. “There could not be a more important place for us to spend our time and resources,” said Axelrod. FINRA’s focus on recidivist brokers is consistent with its 12th Annual Regulatory and Examination Priorities Letter released earlier this year, and indicates that it is a recurring issue that continues to impact the financial sector. It is clear that firms that are making hiring decisions should be careful to consider the issues raised in the program, and all firms must assure that they have and carry through on enhanced compliance procedures for associates with a regulatory history.

 

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Photo of William Mack William Mack

William B. Mack is a co-chair of the Financial Regulatory and Compliance Practice. He is experienced in advising companies on regulatory and compliance matters relating to the Securities and Exchange Commission regulations, the Exchange Act, Anti-Money Laundering laws and Financial Industry Regulatory Authority

William B. Mack is a co-chair of the Financial Regulatory and Compliance Practice. He is experienced in advising companies on regulatory and compliance matters relating to the Securities and Exchange Commission regulations, the Exchange Act, Anti-Money Laundering laws and Financial Industry Regulatory Authority (FINRA) rules.

William’s practice involves all aspects of broker-dealer regulation, including Self-Regulatory Organization (SRO) membership, supervision, employment, research, soft dollar arrangements, chaperoning of foreign broker-dealers, social media, use of foreign finders, anti-money laundering rules, alternative trading systems (ATS), exchanges, and market making issues. He also provides regulatory guidance to investment banking clients in connection with securities offerings and related trading issues.

Photo of Dale Rose Goldstein Dale Rose Goldstein

Dale Goldstein handles a wide variety of litigation matters, with a focus on securities litigation, trade secret disputes, products liability, and general commercial litigation. Dale has represented and advised major financial institutions, underwriters, investment advisers, and other organizations in connection with investigations by

Dale Goldstein handles a wide variety of litigation matters, with a focus on securities litigation, trade secret disputes, products liability, and general commercial litigation. Dale has represented and advised major financial institutions, underwriters, investment advisers, and other organizations in connection with investigations by the Securities and Exchange Commission and Financial Industry Regulatory Authority (FINRA). She is also experienced in handling a range of government investigations and regulatory and compliance matters throughout the country. Additionally, Dale has experience with international criminal law matters.