FINRA Unscripted

Last week, FINRA CEO Robert Cook spoke to an audience of regulators, academics, law enforcement agencies, advocacy groups and financial firms at a conference hosted by the FINRA Foundation to underscore the importance of working together to disrupt the cycle of fraud. 

He highlighted specific areas for further coordination and announced that FINRA will reach out operators of existing regulatory databases to explore ways to create a one-stop shop resource for investor research. On this episode, we  tune in to his remarks. 

Resources mentioned in this episode:

Full Text of Speech As Prepared for Delivery

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FINRA’s Examinations team carries out one of FINRA’s core functions in the examination of FINRA member firms. In an effort to continuously improve the program, the team has undertaken changes to create efficiencies before, during and after the exam process. 

On this episode, Michael Solomon, executive vice president of Examinations and the Membership Application Program, Tom Mellett and John Martino, both vice president of Firm Group Examinations, join us to detail some of the recent changes, including the introduction of thematic reviews, changes to the post-exam closeout process and more.

Resources mentioned in this episode:

Episode 132: The Ins and Outs of FINRA’s Annual Program

2024 Regulatory Oversight Report

Targeted (Sweep) Exam Letters

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FINRA’s Membership Application Program (MAP) team serves as the first point of contact for firms looking to enter the broker-dealer industry. It works both to protect investors by ensuring would-be member firms meet FINRA standards of admission, and to help new and existing firms grow and evolve, ensuring a vibrant market for all.

On this episode, Cindy Foster, Vice President of MAP, joins us to share more about FINRA standards of admission and how the group works to ensure a smooth process for both current and prospective member firms. 

Resources mentioned in this episode:

Member Application Rules

Broker-Dealer Registration

FINRA Standards for Admission

Episode 117: Reviewing and Approving Digital Asset Firms

MAP Tools and Videos

MAP FAQs

Checklist for Mandatory Materiality Consultation

Residential Supervisory Locations (RSL) FAQs

Phone: 212-858-4000, option five

Email: [email protected]

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Last summer, we introduced listeners to FINRA’ Crypto Hub and enterprise-wide strategy for keeping up with the evolving crypto asset regulatory landscape. A year later, this remains an important area of focus for investors, the industry and FINRA. 

On this episode, Jamie Udinson, senior director of the Cyber and Analytics Unit, Michael Yuan, a director with FINRA’s Risk Monitoring program, and Jason Stralka, an examination manager with the Exam program, join us to provide an update on FINRA’s crypto asset work, to dig into the results of a recent survey of member firms regarding their crypto-asset touchpoints, to tell us about the new spot Bitcoin ETP market and more.

Resources mentioned in this episode:

2024 Regulatory Oversight Report: Crypt Asset Developments

Crypto Assets Key Topic Page

Episode 136: An Introduction to FINRA’s Crypto Asset Work and the Crypto Hub

Episode 137: The Crucial Role of FINRA’s CAI Team

Episode 138: FINRA’s Blockchain Lab

Episode 145: An Update on FINRA’s Crypt Asset Targeted Exam

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FINRA's Financial Intelligence Unit acts as a nerve center for information on emerging threats impacting the financial industry with the aim of providing actionable intelligence to firms, other regulators and law-enforcement to keep investors safe. 

On this episode, Blake Snyder, senior director of FIU, joins us to share how the group has grown and matured over the last few years and how they are evolving the way they share information, including through the introduction of the new Threat Intelligence Products, or TIPs.

Resources mentioned in this episode:

Episode 33: AML in the Securities Industry

Episode 86: Introducing FIU

TIP: Protecting Vulnerable Adult and Senior Investors

Investor Insight: Pig Butchering Scams

Investor Insight: Ramp-and-Dump Scams

Regulatory Notice 22-25

National Cyber-Forensics and Training Alliance (NCFTA)

Infraguard

[email protected]

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Financial social media influencers—or finfluencers—are growing in popularity as a cheap way to reach a new generation of investors. But using these individuals to promote a firm its products or services comes with risks, as revealed by the results of a recent targeted review of FINRA member firm practices in the space. 

On this episode, Ira Gluck, senior director of Advertising Regulation, and Melissa Turitz, a director with FINRA Enforcement, dig into the results of the finfluencer target review, the risks and regulatory requirements around this newer form of advertising and share some best practices for firms looking to make use of social media influencer programs. 

Resources mentioned in this episode:

Reg Notice 17-18: Guidance on Social Media and Business Communications

February 2023 Finfluencer Sweep Update

Rule 2210 – Communications with the Public

Press release – March Finfluencer Enforcement Action

April Finfluencer Letter of Acceptance, Waiver and Consent (AWC)

Gen Z and Investing: Social Media, Crypto, FOMO and Family (Research Report)

Episode 134: A Look at the Attitudes and Behaviors of the Youngest Investors

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In late May, certain amendments to FINRA's margin rule, Rule 4210, went into effect to address a significant source of potential systemic risk and risk to FINRA member firms. The amendments introduced specific margin requirements related to covered agency transactions. 

On this episode, we talk to David Aman, senior advisor, and James Barry, director of Credit Regulation, both with FINRA's Office of Financial and Operational Risk Policy, and with Michael MacPherson, a senior advisor with Member Supervision’s Risk Monitoring team, to learn more about the purpose of the rule, which firms might be impacted by the change and what those firms need to think about to ensure compliance with the amended rule. 

Resources mentioned in this episode:

Contact: [email protected]

Key Topics: Margin

FAQs Regarding Covered Agency Transaction Margin under FINRA Rule 4210

Reg Notice 23-14: Amendments to Covered Agency Transaction Requirements Under FINRA Rule 4210

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Protecting investors from harm is a top FINRA priority. And when it comes to specific individuals who may pose a risk, FINRA's High Risk Representative (HRR) Program is on the case. 

On this episode, Brooks Brown, Senior Director, and Eric Hebert and John Salerno, Investigative Directors, from the HRR unit join us to explain how they identify and monitor individuals who pose an elevated risk of misconduct to protect investors and maintain the integrity of the market. 

Resources mentioned in this episode:

Episode 114: Bringing Cases Against Individual Brokers

Episode 150: A Cybersecurity Update with FINRA’s Complex Investigations and Intelligence Team (CII)

Key Topic: Protecting Investors from Misconduct

Virtual Conference Panel: Supervision of High-Risk Activities

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Every day, FINRA's Insider Trading Detection Program uses sophisticated technology and analytics to monitor 100% of trading in stocks, options and bonds for potentially suspicious activity around material news events, resulting in hundreds of referrals to the SEC and law enforcement every year. 

On this episode, we hear from Sam Draddy, a Senior Vice President of the Market Abuse Unit within FINRA's Market Regulation and Transparency Services, and Karen Braine, Vice President of the Insider Trading Detection Program, about how they connect trading data, information from public sources and from companies and FINRA firms to pull together actionable intelligence. 

Resources mentioned in this episode:

Episode 23: Insider Trading: Finding the Needle in the Haystack

Blog: FINRA Plays a Vital Role in Exposing Insider Trading

SEC Litigation Release: Sean R. Steward et al.

SEC Litigation Release: Andreas Bechtolsheim

SEC Litigation Release: Joseph C. Lewis et al.

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Senior investor protection has long been a priority for FINRA, and the Vulnerable Adults and Seniors Team (VAST) is at the forefront of FINRA's efforts in this space. 

On this episode, we hear from Brooke Hickman, Director of the Vulnerable Adults and Seniors Investigative Team, Mike Paskin, a manager with VAST Investigations, and Liz Yoka, a manager of the VAST Intake team, to hear how the groups work with individual investors, firms, states and other regulators to prevent and detect financial exploitation of senior and other vulnerable investors.

Resources mentioned in this episode:

2024 Annual Regulatory Oversight Report

Episode 72: Anti-Money Laundering and Elder Exploitation

Episode 128: The 2023 Senior Investor Protection Conference

Episode 105: The Essential Senior Investor Protection Tools: FINRA Rules 2165 and 4512

FINRA Securities Helpline for Seniors – 844-57-HELPS (844-574-3577)

FINRA Key Topic Page: Senior Investors

FAQ Regarding FINRA’s Rules Relating to Financial Exploitation of Seniors

Trusted Contact Infographic

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