FINRA Unscripted

FINRA’s 2019 Budget Summary provides a unique view into FINRA’s budget for the current calendar year – providing greater transparency not just into FINRA’s operations, but also the self-regulatory organization’s financial guiding principles.

The 2019 Budget Summary includes no fee rate increase for member firms, but projects a shortfall of $185.8 million – the result of a projected increase in operating expenses while revenues stay largely flat. But FINRA Chief Financial and Administrative Officer Todd Diganci isn’t worried. He explains how it is all part of FINRA’s long-term financial plan.

On this episode of FINRA Unscripted, we learn more.

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The Central Review Group is the nerve center of FINRA’s Office of Fraud Detection and Market Intelligence (OFDMI), triaging tens of thousands of matters every year.

The group combs through everything from investor complaints, external tips and employee tips to disclosure events, routine regulatory filings and more to look for red flags of fraud or other concerns. If something of concern is spotted, the group determines how to escalate the situation, whether internally within FINRA or through a referral to other regulators.

On this episode of FINRA Unscripted, Tony Cavallaro joins us to tell us more.

Resources mentioned in this episode:

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As a self-regulatory organization, FINRA is uniquely positioned to gain meaningful insights from its members to ensure FINRA’s regulatory programs are working for everyone. Tasked with maintaining that relationship and keeping an open dialogue is FINRA’s Office of Member Relations and Education.

The Member Relations and Education team routinely engages with firms through conferences, roundtables, boot camps and more. And because they recognize that regulation isn’t simple or easy, they offer a host of educational tools and resources.

On this episode of FINRA Unscripted, Chip Jones, FINRA’s Senior Vice President of Member Relations and Education, joins us to tell us more about how FINRA works to make regulation smarter.

Resources mentioned in this episode:

Get Involved

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FINRA’s Central Registration and Depository (CRD) system is the central licensing and registration system not just for FINRA, but also for U.S. securities exchanges and all 50 states . But the system is still partying like it’s 1999.

Twenty years after the CRD system’s last major update, FINRA is in the middle of a multi-year effort to overhaul the registration and disclosure system that is the backbone of the BrokerCheck, the free tool that allows investors to research the background of their financial professionals and firms.

On this episode of FINRA Unscripted, FINRA’s executive vice president of Registration & Disclosure, Derek Linden, tells us more about the transformation and what users can expect.

Resources mentioned in this episode:

CRD Transformation Website

Announcement: CRD Transformation

BrokerCheck

12: How the Cloud Has Revolutionized FINRA Technology

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The FINRA Institute at Georgetown Certified Regulatory and Compliance Professional

The two-week program is the premier professional development program for compliance professionals, providing not just a comprehensive look at current securities laws and regulations, but also an understanding of the regulatory trajectory and where things are going.

Resources mentioned in this episode:

FINRA Institute at Georgetown

Small Firm CRCP Scholarship

CRCP Program: Week I

23: Insider Trading: Finding the Needle in the Haystack

FINRA Annual Conference

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RegTech tools can present both tremendous opportunities and tremendous challenges for firms and regulators alike. They can also pose some interesting philosophical questions when it comes to their implementation.

On this special episode of FINRA Unscripted recorded at FINRA’s RegTech conference in New York, we hear three unique perspectives on these opportunities and challenges. Joining us on this episode are: Nick Cook, head of RegTech and Advanced Analytics at the United Kingdom’s Financial Conduct Authority (FCA); Michael Pieciak, Vermont’s Commissioner of Financial Regulation and the president of the North American Securities Administrators Association (NASAA); and Haime Workie, FINRA’s senior director of Emerging Regulatory Issues.

Listen to hear Nick, Mike and Haime discuss some of the most common ways firms are currently using RegTech, the challenges in implementation, key areas to watch and more.

Resources mentioned in this episode:

RegTech White Paper

FinTech at FINRA

Innovation Outreach Initiative

RegTech | FCA

NASAA

Vermont Website

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The Annual FINRA Priorities Letter is a great resource for firms looking to improve their compliance, supervisory and risk management programs. But the 2019 Letter is a little different—this year focusing on materially new areas of focus so readers can better identify areas for program improvement.

On this episode of FINRA Unscripted, we’re joined by Bari Havlik, FINRA’s executive vice president of Member Supervision, Steve Polansky, a senior director in Member Supervision, and Gene DeMaio, a senior vice president of options regulation and the trading and financial compliance exam program, to learn more about the changes to the letter and to drill into a few key topics.

Stay tuned to hear more about new priorities such as fixed income mark-up disclosure and supervision of digital assets business, as well as some new takes on existing priorities, including suitability, best execution, market manipulation and more.

Resources mentioned in this episode:

2019 Priorities Letter

2018 Priorities Letter

2018 Exam Findings Report

Fixed Income Confirmation Disclosure FAQs

SEC Statement on Digital Asset Securities Issuance and Trading

SEC Issues Investigative Report on DAO Tokens

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Academics, economists, CEOs. FINRA’s Board of Governors is made up of a diverse group of individuals with diverse perspectives—a must for a group responsible for overseeing a complex organization such as FINRA.

But how does someone become a member of FINRA’s Board of Governors? And what does this group do? What are its priorities for 2019? On this episode of FINRA Unscripted, Marcia Asquith, FINRA’s executive vice president of Board and External Relations answers these questions and more.

Resources mentioned in this episode:

2: Building A More Transparent Organization

FINRA Governance

Board Composition

FINRA360

Budget Summary and Financial Guiding Principles

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Cybersecurity is a major challenge for everyone – companies and individuals alike. But it can be a particularly big challenge for those in the financial industry. After all, it isn’t just firm data at risk—customer data and customers’ life savings may be at stake.

Cybersecurity is such a big obstacle for financial firms that this month FINRA released the “Report on Selected Cybersecurity Practices – 2018.” The new report sheds light on some effective practices for FINRA member firms when it comes to branch office controls, phishing attacks, insider threats, penetration testing programs and mobile devices.

On this episode of FINRA Unscripted, Steve Polansky, a senior director in FINRA’s Member Supervision Shared Services group, Dave Kelley, a surveillance director out of our Kansas City office, and Yolanda Trottman, an examination director in the regulatory review group in New York join us to discuss the report’s findings.

Resources mentioned in this episode:

Report on Selected Cybersecurity Practices

2018 Examination Findings Report

2015 Report on Cybersecurity Practices

Phishing Investor Alert

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When it comes to detecting insider trading, it really is like finding a needle in a haystack with more than 15,000 different stocks, options and bonds trading every day across millions of transactions. Yet, Sam Draddy and the Insider Surveillance team in the Office of Fraud Detection and Market Intelligence manage to find those needles.

The Insider Surveillance team does it by combining a lot of data—20 years’ worth of data on thousands of actively traded bonds, stocks and equity options—with a mix of sophisticated surveillance technology and good old-fashioned detective work.

On this episode of FINRA Unscripted Sam Draddy walks us through the process. Plus, he shares details of some of the most interesting cases of his career and attempts to answer the real question: why do people do it?

Resources mentioned in this episode:

SEC’s Edgar Database

Pro Golfer Agrees to Repay Trading Profits

SEC’s Perk Hixon Case

Did Somebody Just Eat a Post-It?

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