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October 17, 2016 at 08:34 AM
The Securities and Exchange Commission has launched a dedicated inspection team to oversee the Financial Industry Regulatory Authority, Marc Wyatt, director of the agency’s Office of Compliance Inspections and Examinations, said Monday.
The new group, FINRA and Securities Industry Oversight (FISIO), which is headed by Kevin Goodman, head of the agency’s broker-dealer exam program, “is now up and running” for fiscal year 2017, which started on Oct. 1, Wyatt told reporters after his comments at the National Society of Compliance Professionals annual meeting in Washington.
During his comments at the event, Wyatt noted that the “significant number” of SEC broker-dealer examiners that shifted this year to examine investment advisors and investment companies prompted the heightened FINRA scrutiny.
“We took resources from the broker-dealer program and moved them into” the advisor and investment company exams, Wyatt said. “As a result of doing that, we’re somewhat more reliant on FINRA. So in relying more on FINRA, we need to make sure we’re enhancing our oversight.”
As of Oct. 1, OCIE has seen a more than 20% increase in the number of IA/IC exams because of new hiring slots that SEC Chairwoman Mary Jo White allocated to OCIE as well as from OCIE’s shifting of examiners.
White has also noted during her time as SEC chairwoman that the SEC has enhanced its oversight of FINRA, “and will continue to do so.”
Over the past two years, Wyatt noted that more than 2,000 new advisors registered with the SEC, joining OCIE’s examination pool. “We want to make sure OCIE is doing our utmost to expand our reach into this key population, and I believe our recent redeployment of staff puts us in the best position to do that.”
Wyatt noted that together, FINRA and the SEC examine 50% of broker-dealers each year.
The new FISIO team includes “roughly 40 people” throughout the country, Wyatt told reporters, and consolidates the SEC’s oversight of FINRA “into a single group.” The FISIO team will oversee FINRA “both in the regional footprint that it [the self-regulator] has and ensuring that it’s fulfilling its mandate in terms of evaluating its member broker-dealers.”
Goodman noted on a separate panel discussion at the conference that in the shifting of examiners, “one-third” of the broker-dealer exam program’s assets were moved “to bolster the exam cycle and scope” of advisors.
