On Sep. 3, FINRA issued podcast on examination program changes.
FINRA issued podcast entitled, Examination program: optimizing for the future.
Executive Vice President of Examinations, Michael Solomon, and Vice Presidents of Firm Group Examinations, Tom Mellett and John Martino, detailed recent changes.
Follows FINRA's publication of 2024 annual regulatory oversight report, see #197409.
Also FINRA's Jan. 2024 crypto asset communications targeted sweep, see #198906.
Examination Program
Introduced new type of exam review called thematic review, focus on business area or product where see heightened risk, or where firm may not be as focused as should be.
Way to compare and contrast firms’ controls and procedures across similarly situated firms in a particular product or an area where think there is a little elevated risk.
By doing across multiple firms with one or two management leaders over particular thematic review, have higher level of consistency in executing exam, gather info.
Conducted across different areas, from net capital to supervisory processes over communications with the public, off-channel communications, use of broker rankings.
Thematic reviews very focused on information gathering, likely ask to have a lot of interviews with business people in particular business unit, who designed, rolled out.
Also control people assigned to the business area or product that may be looking at.
Look for opportunities increase efficiencies; increase collaboration across exam team.
Assigned in certain situations individual that is responsible for really coordinating and working across the larger exam team to make sure certain communication occurring.
Consider size, scope of particular exam, spread out throughout year, multiple years.
Historically, after exam conclusion, only followed up immediately on findings that presented material ongoing risk, and through subsequent cause examination of a firm.
Changed process so right after close exam, if corrective action for exception not shown during exam, follow up shortly after exam ends to verify corrective action taken place.
Exception guidance groups designed to gather together across FINRA those with a high level of expertise in a particular area that has a lot of complexity and nuance.
When there is potential exception that exam team has found, bring to one of these exception guidance groups to review evidence, and group helps make determination.
