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April 24, 2018 at 02:43 PM
The Financial Industry Regulatory Authority released Tuesday a progress report on the self-regulator’s FINRA360 initiative — a top-to-bottom review of the broker-dealer regulator that was launched in March 2017 by FINRA CEO Robert Cook.
The multi-year program will continue this year with a major focus on FINRA’s examination program, to be spearheaded by FINRA’s new head of member supervision, Bari Havlik, who starts at the self-regulator on Monday, Cook told ThinkAdvisor in a Tuesday phone interview.
Havilk, who most recently was senior vice president and chief compliance officer of Charles Schwab, replaces Susan Axelrod, who is joining Merrill Lynch Wealth Management.
Cook said during the interview that FINRA will be looking this year at the “overall structure” of the three-pronged exam program, specifically to assess whether more coordination is needed among the three exam groups or if they should be consolidated.
As noted in the 42-page report, FINRA began using a planning framework for its calendar-based examination programs in 2018 “so that the depth and breadth of exams under this planning framework will more closely match the risks of the firm being examined, avoiding a ‘one-size-fits-all’ approach.”
How does he feel about the program’s first year? “I’m tremendously proud about the work the team has done [on FINRA360] in the last year, and the progress we’ll be making in the year to come,” Cook said. “If anything, this exercise demonstrates the benefits of good old-fashioned listening, engaging and improving.”
Cook added: “One of the interesting things to me is that this [FINRA360] exercise has highlighted that there are tremendous opportunities to reduce burdens on firms without jeopardizing investor protection.”
But FINRA’s exam program is “by no means” the only area of focus, Cook said during the interview, with the self-regulator also looking this year at its organizational structure and how its “policymaking groups are organized internally — who’s responsible for developing and articulating policy.”
As to whether the Securities and Exchange Commission’s newly released standard of conduct proposal for broker-dealers and advisors will influence the FINRA360 initiative moving forward, Cook said that FINRA “will engage with the SEC” on the proposal as the agency takes comments “on how it wants to proceed.”
