Stung By Sharp Criticism, FINRA Vows Changes In Its Examination Protocols

Tuesday, July 05, 2011 06:48
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Stung By Sharp Criticism, FINRA Vows Changes In Its Examination Protocols

Tags: FINRA

Whether you blame Madoff or simply an impression that FINRA is "soft" on brokers, the regulator has promised deeper branch-level exams coming in the next few years.

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Rick Ketchum, who runs FINRA, says he's added 20 district coordinators to his staff, bringing the total number of personnel assigned to supervision to 90.

 

This will give the regulator more resources to really drill down into separate branches, instead of just focusing on the head office.

 

The word "point of sale" has come up, which means the examiners will be spending more time on site -- historically a more fertile territory for uncovering problems.

 

And over the next two to three years, he promises a more high-tech forensic accounting system will emerge in which FINRA crunches the numbers on all member firms to gauge risk and compliance.

 

The news that FINRA is getting tough might actually reassure those who consider the regulator -- funded by the securities industry firms it it charged to police -- soft on bad sales practices.

 

Otherwise, as at least one watchdog group has noted, rewarding FINRA by handing it oversight over RIAs as well makes little sense.

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