The Financial Industry Regulatory Authority is giving broker-dealers advance notice on when examiners will come knocking as well as the ability to receive exam findings earlier.
For broker-dealers, "it's challenging to resource examinations, to adequately respond to exam inquiries," Jim Reese, senior vice president and head of exams for FINRA, said on a recent FINRA Unscripted podcast. "They're getting pinged by other regulators. They're getting pinged by both at the state and federal level, and in some cases, even international regulatory authorities."
Meanwhile, Reese continued, "they're also trying to conduct business and respond to customers and trying to take an objective look and say, how can we better bring firms into the fold kind of around how we plan for our examinations and bring efficiency to the overall process?"
While it's FINRA's "obligation to conduct robust oversight ... it's also our responsibility to do so in a way that avoids imposing [un]necessary burdens," Reese added.
In January, FINRA "started to notify member firms not only about this initiative, but also the quarter during which we plan to conduct an examination," Reese continued. "Again, this change supports our FINRA Forward [rulebook revamp] goals by providing firms greater visibility around resource planning and allocation while maintaining, of course, the flexibility we need for our risk-informed examination approach."
FINRA has "built an infrastructure that allowed us to evaluate our previous schedules to see how often firms moved from quarter to quarter to ensure that if we were being transparent and saying, 'Hey, we're going to come in on this quarter,' that we actually would be able to maintain that commitment for a large portion" of firms, Demetrios Koutros, FINRA's senior vice president of Member Supervision's operations, procedures and standards, added on the podcast.
FINRA published its 2026 exam schedule after first-quarter exams were announced. The goal for 2027 is to publish the entire exam schedule before announcing quarterly exams.
Earlier Exam Findings
Firms can also choose to receive exam findings earlier.
"There are situations where maybe in some of our exams that extend for a longer period of time than others, where we may be drawing conclusions or reaching finality on certain findings earlier than other aspects of that examination," Reese said. "And we want firms to have the opportunity, should they select to have it ... to provide them those findings in writing earlier on or at the time that we've concluded that particular review."
This "not only helps increase that level of transparency, but also helps firms take that information and make decisions internally as to what steps they may need to start to take as far as corrective action," Reese added. "It also gives them an opportunity to provide us potentially additional documentation or context that maybe we previously didn't have an opportunity to consider and really helps move some of that opportunity further into the exam process, allowing the firms to more proactively engage with us and address those issues more timely."
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