For the broker dealer, there are a few things that are certain in life, and one of those happens to be Financial Industry Regulatory Authority (“FINRA”) audits. No broker dealer wants to get a FINRA examination call. However, there are multiple ways that a broker dealer can be prepared for their firm’s FINRA exam.
The most important thing a broker dealer can have in place is a solid compliance program. This includes but is not limited to:
- Knowing where your broker dealer’s books and records are stored and how to easily access said files
- Being able to clearly explain your broker dealer’s operation’s programs such as anti-money laundering, due diligence, and communications
- Having your broker dealer’s policies and procedures up to date
Additionally, those within the broker dealer that are involved with the FINRA audit need to take the time to study what FINRA is expecting during the examination. Earlier this year, FINRA released their 2023 Reports on FINRA’s Examination and Risk Monitoring Program. This guidance goes into greater detail regarding what FINRA is going to be studying when they handle your broker dealer’s FINRA examination.
Per Greg Ruppert, Executive Vice President, Member Supervision at FINRA, “This report represents a holistic approach to FINRA regulation, leveraging information from across our regulatory operations to provide member firms with information to help them enhance their core compliance programs.”
The report covers twenty-four topics, including several new topics, all of which are a result of the ever-evolving broker dealer industry. Spend some time reviewing this report against what your broker dealer has in place to determine where your broker dealer’s strengths and weaknesses are and address the weaknesses immediately with a plan of action and correction. The goal of a FINRA audit is to ensure that your broker dealer is doing everything necessary to be successful.
Please contact Securities Compliance Management here to learn more about how we can help your broker dealer build a strong compliance program and prepare for that dreaded phone call that will come. It is as sure as death and taxes. A FINRA audit will happen. Allow SCM to help you prepare.