by Howard Haykin

Last Friday, FINRA published its Annual Report on FINRA Examination Findings, a collection of selected observations from recent examinations that FINRA considers worth highlighting because of their potential significance, frequency, and impact on investors and the markets. That said, …

►    this report does not represent a complete inventory of observations from all FINRA examinations; nor does it indicate that any specific issues exist at any particular firms.

►    this report describes practices FINRA has observed to be effective in certain circumstances, which firms may use as a resource to improve their compliance and supervisory programs.

►    readers should not interpret this report as creating new legal or regulatory requirements or new interpretations of existing requirements.

HIGHLIGHTED OBSERVATIONS.    The report focuses on these topics:

• Suitability for Retail Customers;  (including findings from ... 'a targeted examination (sweep) of volatility-linked products.')
• Fixed Income Mark-Up Disclosure;
• Reasonable Diligence for Private Placements; 
• Abuse of Authority.

SUMMARY OF ADDITIONAL OBSERVATIONS.   

• Anti-Money Laundering; 
• Accuracy of Net Capital Computations; 
• Liquidity; 
• Segregation of Client Assets; 
• Operations Professional Registration; 
• Customer Confirmations; 
• DBAs and Communications with the Public; 
• Best Execution; 
• TRACE Reporting; 
• Market Access Controls.