2016 SEC & FINRA Exam Priorities

If you ever want to know what the regulators are focusing on when they conduct examinations, they actually tell you. Last month FINRA and the SEC put out their examination priorities. These priorities can be used to help you understand their focus and give you guidance on how to prioritize your efforts to maintain a compliant firm.

In the coming weeks, Oyster will be providing commentary on some of the hot button issues on the list. We have provided an easy reference is below:

Topic SEC Priority FINRA
Priority
Protecting Retail Investors
Senior Investors x Also includes Vulnerable Adult Protection
ETFs (creation & Redemption process) x x
Private Placement Disclosure & Suitability x x
Transfer Agents x x
Branch Office Supervision x
Fee Selection & Reverse Churning x
Variable Annuities x
Public Pension Advisors  (pay-to-play) x
Product Promotion x
Compliance for Newly-Registered Municipal Advisors x
Previously un-examined Investment Advisors x
Recidivist Reps & their Employers x
Private Fund Advisors x
Sales Charge Discounts & Waivers x
529 College Savings Plans x
Outside Business Activity Review Procedures x
Incentive Structures for Registered Reps x
Market Integrity
Liquidity x x
Excessive Trading x x
Microcap Fraud x x
Clearing Agencies x
Cross-Market & Cross-Product Manipulation x
Vendor Display Rule x
Fixed-Income (order handling, mark-ups & controls) x
Reg SHO x
Audit Trail Integrity x
Technology
Cybersecurity x x
Technology Management (Reg SCI) x x
Financial & Operational Controls
AML  (SARs Reporting) x x
Data Quality & Governance x
Internal Audit x
Information Leakage (surrounding trading activities) x
Position Valuation by Proprietary Traders x
Client Onboarding x
Transmittal of Customer Funds x
Investment Banking & Research Business Lines
(conflicts of interest, undue influence)
x
Outsourcing Due Diligence & Risk Assessment of outsource providers and supervision of outsource services
Market-Maker & Net Capital Exemptions x
Fixed-Income Brokerage x

 

In the interim, if you have any questions or concerns about any of these topics, please contact us and we will follow-up promptly. Our consultants are experts in these areas and have the experience and perspective gained from working with hundreds of clients to help you efficiently and effectively run your firm.

For more information, please call Oyster Consulting at (804) 965-5400, and one of our associates will be happy to assist you.

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