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March 25, 2019 at 03:56 PM
The Financial Industry Regulatory Authority is working on more “credit for cooperation” guidance, which should be out this year, Susan Schroeder, FINRA’s enforcement chief, said Monday.
Meanwhile, the Securities and Exchange Commission will continue to “bring cases faster,” according to the agency’s enforcement chiefs.
FINRA rules require self-reporting of certain violations. The anticipated FINRA guidance will help explain to broker-dealers what kinds of cooperation go beyond what is required and thus deserve “credit” in the form of a reduced sanction, Schroeder said during a panel discussion at the Securities Industry and Financial Markets Association’s annual compliance and legal event in Phoenix.
The new guidance will update Regulatory Notice 08-70, which was issued in 2008.
“We have a self-reporting rule, Rule 4530, which requires certain types of potential violations to be self-reported, and that’s part of the reason that we’re following up this year with more guidance on credit for cooperation,” Schroeder said. “Not all self-reports are created equal.”
Meanwhile, retail investor protection continues to be a priority for the Securities and Exchange Commission, as well as leveraging the agency’s resources “to bring results faster,” stated Steven Peikin, co-director of the agency’s enforcement division, on the SIFMA enforcement panel with Schroeder. An example of this, he said, is the recent self-reporting share-class selection disclosure initiative announced last year.
“We brought the first cases just a week ago; 77 cases against 79 advisors that resulted in the voluntary disgorgement and return to investors of $125 million,” Peikin said.
The 12b-1 fee share class issue was a “problem that we’d seen broadly across the Street” and within a year “broadly swept up a pretty significant problem and achieved pretty good results.”
