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May 21, 2018 at 02:01 PM
Robert Cook, president and CEO of the Financial Industry Regulatory Authority, said Monday that the broker-dealer self-regulator expects to have exam oversight of the Securities and Exchange Commission’s proposed Regulation Best Interest for brokers, if adopted.
At FINRA’s annual conference in Washington Monday, Cook was queried on whether FINRA “will have oversight” of Reg BI.
Cook’s response: “Yes and no. No, in the sense it’s an SEC rule. But yes, in the sense that we routinely examine for compliance with SEC rules. That’s not a new thing. I would imagine any SEC rule, Reg BI, anything else, we’re going to look for compliance with when we do our examinations.”
When examining for an SEC rule, as opposed to a FINRA rule, Cook continued, “we engage in close coordination with the SEC because they’re the ones that hold the interpretive line to decide what’s required and what’s not required.”
In comments to reporters after his remarks on Monday morning, Cook said that FINRA is “still looking at Reg BI and analyzing it. We don’t typically comment on SEC rules. At some point, we’ll share with the SEC our views.”
As to examining broker-dealer firms for compliance with Reg BI, Cook further commented to reporters that “We have a statutory obligation to look for compliance with all FINRA rules, and SEC rules. So if this [Reg BI] was adopted as an SEC rule, we’d have a statutory obligation to oversee it. That said, it’s not our rule, so exactly what the rule means and how it gets overseen is something we’ll be working closely with the SEC on just as we do for other rules that we monitor for compliance.”
Regulation Best Interest is part of the SEC’s three-pronged standard of conduct proposal that the agency approved to issue for a 90-day public comment on April 18.
‘More Work Ahead’ on Exams
What comes next? Cook said that the self-regulator’s top-to-bottom review under FINRA360 — which recently celebrated its first anniversary — is “still far from over,” with “many projects already underway, and year two promises to be just as productive as year one.”
