Coming to a branch near you: Finra examiners

As Finra recently indicated in its summary of this year’s examinations, 2011 was a very busy year.
But one number stood out in the Finra statement about its steps to increase investor protection. The SRO conducted nearly 800 branch exams this year – or roughly 350 more than it conducted in 2010 – as it honed in on the ‘point-of-sale’ in some cases, rather than broker-dealers’ home offices. Here’s the direct excerpt from Finra:

‘FINRA exam staff also placed greater focus on branch-level activity – increased the number of branch exams, and refocused our exams at point-of-sale, spending more time on site at the branch offices and, depending on the firm, less time at the main office. There were approximately 350 more branch office exams conducted this year compared to 2010, bringing the total branch office exams to nearly 800.’

Why the increased emphasis on examining branch-level activity? Finra indicated that it re-jiggered its approach to exams so it could “be more risk-based and ensure exam teams are more focused on those areas critical to investor safety.”

Finra added that it increased its number of examiners and was able to collect more – and improved – data about broker-dealers. The end result? Disciplinary actions totaled 1,411 in 2011, up nearly 8% over 2010.

What should brokers and their firms expect in 2012? Only time will tell. But Finra has made it clear that they’re looking more closely at individual branches than ever before – stay tuned.

Related Topics: Financial Industry Regulatory Authority