Thursday, November 19, 2009

FINRA Examiners: More Time in Member offices

"We need to become more nimble and faster about doing our cases," Finra Chief of Enforcement Susan Merrill said. She said she's taken to reciting the nursery rhyme "Jack be nimble, Jack be quick" around the office.

As reported by Dow Jones FINRA is likely to spend more time in broker-dealer offices. On-site inspections and examinations are "something we're going to use a lot more going forward," Merrill said at an industry conference Wednesday. "Announced on-site inspections, I think, will become more common."
Unannounced visits from the regulators are rare, she added.

Finra staff can more quickly request and receive information when they're in a broker-dealer's office, Merrill said. Several major auction-rate cases are still under investigation, she added. Enforcement division investigations, which are focused on potential wrongdoing, are separate from the ongoing exams conducted by Finra's member regulation division.

Ponzi schemes have become a priority for the regulators this year, Merrill said. Enforcement division is also looking at due diligence practices around the sale of private placements.

Additionally, it's looking into Stock Lending from retail accounts to short sellers and disclosures made to those customers. Finra's enforcement division is looking broadly at the way it operates and has made some changes - big and small and structural and philosophical, Merrill said. These include this spring's creation of a whistleblower office and this autumn's formation of an overarching fraud detection and market intelligence unit to oversee all fraud-related issues. Finra must be more diligent about its coordination with the SEC, Merrill said, adding that Finra is also focused on how it identifies new enforcement cases.

Twitter Updates

    follow me on Twitter

    Call Rosenthal Recruiting to Discuss your Hiring Needs and Career

    (973) 826-0537