On May 18, 2023, during an “Ask FINRA Senior Staff” panel held as part of FINRA’s 2023 Annual Conference, Christopher Kelly, Acting Head of FINRA Enforcement, provided a first look into how FINRA Enforcement intends to address CAT reporting violations as the industry nears the three-year anniversary of the first Phase of CAT go-live and ahead of any published enforcement activity to date.
According to Kelly, FINRA intends to approach CAT-related enforcement in a manner similar to the way it and the SEC approached early enforcement of Regulation BI: with the goal of working with firms to get their CAT reporting right, and not to pursueaggressive discipline just to “send a message.” However, Kelly made clear that while FINRA Enforcement does not plan to discipline firms for every violation of a CAT reporting requirement, there might be Enforcement actions where firms have “completely fallen down” on CAT compliance, such as through a “wholesale” or a material failure to comply.
Other speakers at FINRA’s 2023 Annual Conference raised two ways for firms to mitigate against any disciplinary action, specifically by: (i) promptly responding to and addressing issues raised by FINRA via its Rapid Remediation program, and (ii) self-disclosing reporting issues to FINRA CAT.
Please contact the authors if you have any questions regarding CAT-related compliance or enforcement.