FINRA recently issued a report regarding its examination findings. FINRA issued this report so that firms can gain insight from the work of FINRA’s examination of other firms.
Among the FINRA’s findings are the following areas that need additional attention:
- Cybersecurity, including access management, risk assessments, vendor management, branch office security, segregation on internal duties and data loss prevention.
- Outside business activities and private securities transactions, including failure to provide notice to firms, notice reviews and post private securities transaction approval conduct.
- Anti-money laundering compliance programs, including maintaining adequate policies and procedures for suspicious activities, responsibility for AML monitoring, exclusions from data feeds used for AML monitoring, resources for AML monitoring and independent testing for AML monitoring.
- Product suitability, including unit investment trusts, multi-share class and complex products and training.
- Best execution.
- Market access controls, including establishing pre-trade financial thresholds, implementing and monitoring aggregate financial exposures, tailoring erroneous or duplicative order controls, implementing effective fixed income financial controls, reliance on vendors for fixed income financial controls, and effective testing for fixed income financial controls.
This list and the items in it should provide other firms with the benefit of hindsight. Review the report and then self-critique your firm. Do you have any of these issues? If so, implement modifications and adjustments to address them.