FINRA Mulls Heightened Oversight of High-Risk Brokers

The unit “will rigorously review” these brokers’ interactions with clients — including their compliance with rules concerning suitability, know-your-customer, outside business activities, private securities transactions, commissions and fees, the self-regulator said in releasing its priorities.

In its review of firms’ supervisory procedures for the hiring and retaining of “statutorily disqualified and recidivist brokers,” FINRA is probing whether firms are reviewing “reasonably available public records to verify the accuracy and completeness of the information contained in an applicant’s Form U4.” It also will monitor disclosures on Form U4 and U5 for the timely submission of required disclosures.

FINRA’s board will also zero in on unpaid arbitration awards, by mulling whether to propose amendments to FINRA’s Code of Arbitration Procedure for Customer Disputes and Form U4 regarding payment of arbitration awards by firms and individual brokers.

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