It’s been a little over a year since Robert Cook took the helm as CEO of the Financial Industry Regulatory Authority and launched a top-to-bottom review of the self-regulator via the FINRA360 initiative.
As Cook told House lawmakers in his early September testimony, FINRA360 has already resulted in the self-regulator making new investments in examiner training and offering new compliance tools for broker-dealers as well as a newly consolidated enforcement program, to name just a few initiatives.
(Related: FINRA Fines Down 70% in First Half of 2017)
Finding more ways to crack down on bad brokers also remains in FINRA’s crosshairs. As Cook told the lawmakers, the self-regulator is exploring ways to give investors and research firms access to “bulk data” on broker-dealers that employ brokers with a history of FINRA violations.
In a separate announcement in mid-September, FINRA started publishing data on the diversity of its arbitrator pool on its website.
This month, FINRA will join other regulators like the Securities and Exchange Commission, the North American Securities Administrators Association and the Commodity Futures Trading Commission at a World Investor Week event and issue a joint alert providing key tips for investors to help increase their awareness about financial fraud as well as give information on investor resources and tools like BrokerCheck.
During the early September oversight hearing held by the House Financial Services Committee, Rep. Stephen Lynch, D-Mass., asked Cook why, as reported by Reuters, FINRA’s BrokerCheck database does not permit violations data to be released “in bulk.”
Cook responded: “It’s an area we’re looking at. Historically, the [BrokerCheck] system has been set up to focus on allowing customers to look at their brokers. Over time, we’re realizing that there’s potential opportunity to having them be able to see patterns in their firm, so we have changed our policy on allowing folks to scrape information from our website so they can pull down that information.”
FINRA, Cook added, is also “looking at whether there are packages of [such] data that we could make available to researchers and others.”
FINRA announced in late July that it plans to seek comment on rule amendments relating to brokers with a history of misconduct, as well as amendments to allow the self-regulator to deny a new membership application if the applicant is subject to pending arbitration claims.
The requests for comment on brokers with a history of misconduct, approved by FINRA’s board at the broker-dealer regulator’s July 18 meeting, will be issued in forthcoming regulatory notices.
The SRO’s chief also said that FINRA plans to publish additional guidance regarding broker-dealers’ supervisory obligations related to brokers that may “pose higher risk.”
Cook also explained to lawmakers that later this year, FINRA will provide brokerage firms with a new report that summarizes key exam findings from across FINRA’s programs, “enabling them to use this information to strengthen their own control environment and address any potential deficiencies before their next exam.”