On Jan. 22, 2019, the Financial Industry Regulatory Authority (FINRA) released its 14th Annual Risk Monitoring and Examination Priorities Letter, where it identifies its areas of examination focus for 2019. The FINRA president’s cover note points out the addition to the title of a reference to “risk monitoring.” While the Priority Letter describes the multiple issues and concerns on which FINRA will continue to focus during examinations, the president’s note points out that this year’s Priority Letter reflects two changes: (1) the clarification of how the examination process helps to fulfill the risk assessment function of FINRA; and (2) the shift in emphasis from extensive discussions of continuing concerns that have been the focus of examinations for many years to a more detailed explanation of certain new key priorities that now appear in the new letter.
FINRA’s central examination priorities have been and still include: obligations related to suitability determinations; outside business activities; private securities transactions; private placements, communications with the public; anti-money laundering (AML); best execution; fraud; insider trading and market manipulation; net capital and customer protection; trade and order reporting; data quality and governance; recordkeeping; risk management; and general supervision. However, in contrast to previous years, the 2019 Priority Letter attempts to limit repetitive discussions of certain topics that have been central to its focus in the past.
FINRA’s 2019 highlighted priorities are online distribution platforms, fixed-income mark-up disclosure, and regulatory technology. Reflecting FINRA’s concern with identifying risk factors, the Priority Letter also draws attention to the risks relating to the sales practices, operations, market, and financial practices of FINRA member firms.
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