On January 22, 2019, the Financial Industry Regulatory Authority (“FINRA”) issued its annual letter describing its current risk monitoring and examination priorities. See FINRA, Risk Monitoring and Examination Priorities Letter (Jan. 2019). Although there are no major surprises in terms of priorities, firms would be well-advised to review the letter to ensure that their own compliance policies are meeting with FINRA’s expectations. Indeed, the letter can arguably read as a roadmap to potential future enforcement activity, particularly when coupled with FINRA’s recent efforts to restructure internally to increase efficiency and coordination among its enforcement teams.
Among its new priorities, FINRA highlighted the following:
Meanwhile, FINRA also highlighted continuing priorities. Specifically, FINRA indicated that it will remained focused on the following:
FINRA expects that member firms will consider the topics in its annual letter as they assess their compliance, supervisory, and risk management programs. Accordingly, firms can expect that if they do not address one or more of the listed topics, and are found to be lacking adequate policies or procedures in respect of a listed topic in a 2019 examination, an enforcement action may well follow.
While the potential enforcement risk will vary for every firm, at the very least firms should revisit the specific rules noted in the letter to ensure that their policies and procedures account for recent amendments. Even if FINRA later takes issues with policies and procedures a firm puts in place, being able to document a good faith effort to review the letter and update policies and procedures should help minimize any enforcement risk.