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What Do We Mean by “FINRA Compliance”?
Separately from the SEC, over the years FINRA has developed a set of rules and regulations that must be followed by brokers and brokerage firms in order to remain in business. First and foremost, FINRA requires that all brokers be licensed and registered. On top of that, FINRA ensures that all brokers have passed their examinations, are qualified, and follow all continuing education requirements.
If the trained financial examiners who work at FINRA suspect the rules are being violated by a brokerage firm or individual brokers, they conduct an investigation and examine how those brokers are operating.
Punishments for FINRA Compliance Failures
In order to deter financial misconduct, FINRA aggressively regulates the securities industry. Brokerage firms and individual brokers who fail to comply with FINRA rules and regulations face disciplinary action, including steep fines and loss of license to operate—in effect being banned from working in the securities market. In addition, if FINRA investigators discover instances of fraud or insider trading, they refer those cases to government agencies and the SEC for criminal prosecution.
How to Stay in Compliance with FINRA Rules
FINRA constantly adds new rules and updates existing ones. To understand compliance in this context, brokers would do well to read the FINRA manual in its entirety and commit it to memory.
Realizing that may be a daunting prospect, the organization considerately provides a host of online FINRA compliance tools to help brokers stay in compliance. These run the gamut from templates and calendars to checklists and directories. Their purpose is to help brokers and brokerage firms meet their regulatory requirements, as well as to protect investors and the integrity of the market.
The list of tools is almost as daunting as the rules themselves, and runs from an “Anti-Money Laundering Template” and “Books and Records Requirements Checklist for Broker Dealers” to a “Written Supervisory Procedures Checklist for Capital Acquisition Brokers.”
Major FINRA Compliance Requirements
To further assist brokers and brokerage firms in their efforts to stay in compliance, FINRA recently a “2021 Report on FINRA’s Examination and Risk Monitoring Program” on the 19 major compliance issues brokers need to know and institute. The topics cover firm operations, communications and sales, market integrity, financial management, and they go into granular detail.
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Let YourITgroup Be Your FINRA Compliance Guide
YourITgroup is South Florida’s premier FINRA compliance services provider, serving securities brokers throughout the greater Miami region. We are dedicated to helping organizations achieve complete compliance with applicable regulations in their industry.