FINRA Releases (January 6, 2015) Regulatory A EXAM PRIORITIES LETTER
Five Challenges Firms Should Address Highlighted in 10th Anniversary Letter
Richard G. Ketchum, FINRA’s Chairman and CEO admitted that in the decade since publishing the first exam priorities letter, there have been tremendous changes in broker-dealer operations, the markets and the regulatory landscape. Mr. Ketchum acknowledged that some firms have made great progress in keeping up with these changes, but more attention has to be paid to addressing specific challenges that have been pinpointed as their areas of concern.
A Clearwater Securities Litigation Attorney comments: What is most concerning to us is what those “areas of concern” are by FINRA. The Release goes on to specify five key areas of broker-dealer activity:
- Alignment of firms’ interests with those of this customers;
- Standards of ethical behavior;
- Development of strong supervisory and risk management systems;
- Development, marketing and sale of novel products and services; and
- Management of conflicts of interest.
Isn’t this exactly what the crux of the securities industry is all about? When you think of a business that is built totally on the trust of it’s customers, what relationship could be more based on trust than the broker/client relationship? Ordinary people bring their irreplaceable life savings or retirement funds and entrust it to their broker already believing they are DOING the exact things that FINRA has highlighted in their 10th Anniversary letter as needing improvement.
A Securities Litigation Attorney in Clearwater Warns:
The letter goes on to say that FINRA “also notes its focus on high risk brokers and removing bad actors who prey on vulnerable investors from the securities industry in an expeditious manner. What that sentence doesn’t say that it’s usually those rogue brokers that bring in the largest commissions and bonuses for their supervisor, or, in other words, in most cases, the fox is left to watch the chicken coop. Without a customer complaint to spark an investigation, many of these “bad actors” and their supervisors are most likely not aligning their firms’ interest with those of their customers.
Senior Clients Are The Most Victimized by Rogue Brokers
Sometimes, those rogue brokers aren’t caught until they have fully taken advantage of their senior clients. I have been hired by the families of their deceased relatives that wondered where their loved one’s money went? They didn’t realize they were victims of high frequency trading or the purchase of investments that weren’t suitable for them.
It’s a sad day when FINRA announces they are continuing to observe shortcomings in one of the most trusted business relationships most people have with a single person.
If you want to read the entire News Release: Click Here