FINRA Completes Enforcement Unit Revamp

The Financial Industry Regulatory Authority said Thursday that it has completed integrating the self-regulator’s enforcement functions, and announced a new senior leadership team to lead the new structure.

The consolidation, which began in July 2017 under FINRA360 along with the promotion of Susan Schroeder as head FINRA’s enforcement unit, contains two new centralized groups — the Office of the Counsel to the Head of Enforcement, and Investigations — which FINRA says are “designed to ensure a more consistent and foreseeable enforcement program.”

(Related: FINRA Board OKs E-Signature, Custodian Proposals)

“The consolidation of our enforcement functions enables us to better target developing issues that can harm investors and market integrity, and ensure a uniform approach to charging and sanctions,” Schroeder said in a Thursday statement announcing the new structure.

The broker-dealer self-regulator, she continued, has “purposefully chosen this senior leadership team to enhance the consistency of outcomes of our enforcement actions, and to ensure transparency of our enforcement processes. I look forward to working with this talented, dedicated team.”

The Office of the Counsel to the Head of Enforcement centralizes a group of experienced attorneys and staffers to consult on matters referred for enforcement action and was created to “enhance the consistency and transparency of Enforcement investigations and outcomes.”

This unit is led by Senior Vice President Lara Thyagarajan, who joined FINRA’s enforcement department in 2006 after having been a partner in private practice representing broker-dealers in regulatory investigations and administrative hearings. The Chief Litigation Counsel and Litigation Group also report to Thyagarajan.

The Investigations unit consolidates enforcement’s non-attorney investigators who have significant industry expertise and investigative experience, and work with enforcement attorneys and other groups within FINRA that conduct investigations of potential misconduct.

Terrence Bohan — who has spent the past 23 years at the Securities and Exchange Commission’s New York Regional Office, most recently as a manager in its broker-dealer inspection program — will lead the investigations unit. He will join FINRA as vice president of Investigation on Aug. 13.

Schroeder said in early June that the bottom-line benefit in combining FINRA’s legacy enforcement group with its legacy market regulation legal group would be “a more consistent and foreseeable enforcement program.”

Also under the new structure, the enforcement division’s more than 150 attorneys will be organized into teams to facilitate consistent decision-making across the program while retaining subject-matter expertise in specialized groups:

• Main Enforcement: Generalist attorneys organized in cross-office teams, who investigate and prosecute all types of disciplinary matters. This unit is led by Senior Vice President Jessica Hopper, deputy head of enforcement — a 14-year veteran of FINRA’s Enforcement Department with experience as a manager in compliance in the industry.
• Sales Practice Enforcement: A specialized group of attorneys that counsels Member Supervision examiners during examinations and investigations, and brings disciplinary actions concerning sales practice violations. Senior Vice President Christopher Kelly — a former Chief of the Economic Crimes Unit for the U.S. Attorney’s office in the District of New Jersey — leads this group.
• Market Regulation Enforcement: A team of attorneys specializing in counseling Market Regulation examiners and analysts during trading examinations and investigations arising from FINRA’s trading surveillance, and prosecuting resulting disciplinary actions. This group is led by Senior Vice President Elizabeth Hogan, who joined FINRA in May after 12 years in private practice representing firms in regulatory investigations, specializing in matters involving market structure.