by Howard Haykin

Yes, FINRA’s 2019 Priorities Letter focuses “… primarily on those topics that will be materially new areas of emphasis for our risk monitoring and examination programs in the coming year.” But before focusing on new emerging areas, FINRA advises member firms to not lose sight of critical RECURRING AREAS OF CONCERN.

FINRA examiners will continue to review for compliance regarding these ongoing areas of focus:

• obligations related to suitability determinations, including recommendations relating to complex products, mutual fund and variable annuities share classes, as well as recommendations to use margin or execute trades in a margin account;
• outside business activities and private securities transactions;
• private placements;
• communications with the public;
• anti-money laundering (AML);
• best execution;
• fraud (including microcap fraud), insider trading and market manipulation;
• net capital and customer protection;
• trade and order reporting;
• data quality and governance; and,
• recordkeeping, risk management and supervision related to these and other areas.

In addition, FINRA will focus on risks related to associated persons with a problematic regulatory history. Examiners will evaluate how firms address these risks in their hiring practices and supervision programs.

FINRA will also continue to review the adequacy of firms’ cybersecurity programs to protect sensitive information, including personally identifiable information. [For guidance on cybersecurity practices recommended by FINRA, read the Financialish post, Strengthening Branch Cybersecurity Controls.]

Finally, firms are encouraged to read up on FINRA’s Reports on Examination Findings – for 2017 and 2018.