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FINRA Releases 2019 Annual Risk Monitoring and Examination Priorities Letter

On January 22, the Financial Industry Regulatory Authority (FINRA) issued its annual Risk Monitoring and Examination Priorities Letter. This year’s letter includes a number of new areas for firms to consider in seeking to improve their compliance, supervisory and risk management programs.

Among other things, FINRA will focus on the following items in 2019:

  1. sales of securities through online platforms in reliance on Rule 506(c) of Regulation D and Regulation A under the Securities Act of 1933;

  2. compliance with the mark-up and mark-down disclosure obligations for fixed income transactions pursuant to recent amendments to FINRA Rule 2232 (Customer Confirmations) and MSRB Rule G-15;

  3. regulatory technology, such as supervision and governance systems, third‑party vendor management and safeguarding customer data;

  4. sales practices, such as suitability determinations, protection of senior investors, outside business activities and private securities transactions;

  5. supervision of digital assets business, including how firms determine whether a given digital asset is a security and whether members have implemented adequate controls and supervisions related to digital assets;

  6. compliance with FinCEN’s Customer Due Diligence rule, which requires firms to identify beneficial owners of legal entity customers;

  7. market risks, including best execution, market manipulation, market access, short sales and short tenders; and

  8. financial risks, including credit risks, funding and liquidity planning.

FINRA also will continue to review for the adequacy of firms’ cybersecurity programs to protect sensitive information, including personally identifiable information.

FINRA’s full letter is available here.

©2019 Katten Muchin Rosenman LLP


About this Author

Michael T. Foley, Katten, Lawyer, Finance, FINRA, Chicago
Special Counsel

Michael Foley represents broker-dealers, investment advisers and other financial services industry participants with respect to a broad spectrum of legal and regulatory matters arising under the federal securities laws.

Michael has nearly 20 years of experience in private practice and in-house at both a large, full-service broker-dealer and at an online discount broker-dealer, advising broker-dealers and other financial institutions regarding compliance with the federal securities and commodities laws, and with the regulations of the US Securities and Exchange...

Laura Krcmaric, Financial Services Attorney, Katten Law Firm

Laura Krcmaric represents clients in the financial services industry, focusing on regulatory and compliance work. Prior to joining Katten, Laura served as counsel for Credit Suisse, where she provided advice to the private banking and wealth management division. She also was an honors intern with the Securities and Exchange Commission.

While in law school, Laura served as a staff member and symposium editor for the North Carolina Law Review. She also was a member of the Community Development Law Clinic, representing nonprofit organizations.