FINRA Announces Escalation of High-Risk Broker Program

Thursday, November 28, 2013 12:28
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FINRA Announces Escalation of High-Risk Broker Program

Tags: compliance | FINRA

Facing government pressure to crack down on the industry's most problematic registered representatives, FINRA announced a program in February 2013 to focus on what it deems "high-risk brokers."  Now FINRA is expanding the program.

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As a result of this initiative, FINRA has conducted expedited investigations of 42 advisors, and barred 16 individuals, according to a letter recently published by FINRA's CEO, Richard Ketchum.
 
Mr. Ketchum's letter indicated that FINRA will be expanding the high-risk broker enforcement program in 2014, including the creation of a dedicated team to investigate misconduct.
 
Ketchum did not describe the exact methods that FINRA's Office of Fraud Detection and Market Intelligence uses in order to identify advisors engaging in suspicious conduct. However, in addition to the high-risk broker enforcement program, FINRA utilizes a computerized risk-analysis "broker migration model" to track representatives who previously worked at FINRA Member Firms that have been expelled, as well as a separate "problem broker model" tool that scrutiinzes representatives who have had multiple customer complaints or other serious problems disclosed on their CRD records. 
 
Overall, FINRA barred 1,342 registered representatives from the industry from January 2011 through September 2013.

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