FINRA Issues Guidance, Seeks Comment on High-Risk Brokers

The broker-dealer self-regulator encouraged BDs to adopt practices outlined in the Notice “to strengthen their own supervisory procedures, as appropriate to their business,” adding that the Notice is one of several FINRA initiatives focused on associated persons with a history of past misconduct that pose a risk to investors and the firms that employ them.

FINRA states that effective heightened supervision plan should include, at a minimum:

• Designating a principal with the appropriate training and experience to implement and enforce the plan;
• Requiring appropriate additional training for the associated person subject to the plan to address the nature of incidents resulting in the plan;
• Requiring the written acknowledgment of the heightened supervisory plan by the associated person subject to the plan and the designated supervisory principal; and
• Periodically reviewing the heightened supervision plan to assess its effectiveness.