Practice Management

Schroeder steps down as head of Finra enforcement

She led merger of disparate operations, set principles for actions

The woman who leads Finra’s efforts to crack down on brokerage firms that violate its rules will leave the organization later this year.

The Financial Industry Regulatory Authority Inc. announced Thursday that Susan Schroeder, executive vice president and head of enforcement, will be stepping down. Her departure date is not yet known, but she is expected to leave by December.

Jessica Hopper, deputy head of enforcement, has been named acting head of enforcement.

Ms. Schroeder was appointed enforcement chief in July 2017. During her tenure, she oversaw the merger of two Finra enforcement operations — one for trading violations found through market surveillance and another that dealt with matters identified by Finra’s other regulatory divisions.

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“She’s done a great job as head of enforcement,” said Emily Gordy, a partner at McGuireWoods and a former Finra senior vice president for enforcement. “She’s led the department through its most fundamental change in decades.”

The unified approach, which emanated from the Finra 360 self-review initiative, has made Finra enforcement more efficient and consistent, she said.

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Ms. Gordy also credited a speech by Ms. Schroeder in February 2018 with laying out guiding principles for the agency’s enforcement, including an emphasis on customer restitution, self-reporting by firms and proactive corrective measures.

“All of these factors are important in making a decision to bring a case and, if one is brought, what that case looks like,” she said.

The priority put on restitution and self-reporting were highlighted in an initiative Finra launched earlier this year to target firms that recommended high-fee 529 college savings plans share classes that are too expensive for some investors.

In July, Finra detailed what kind of cooperation on enforcement actions would ease sanctions for firms.

Ms. Schroeder has worked at Finra for eight years, previously serving as senior vice president and deputy chief of enforcement.

It’s not unusual for someone in Ms. Schroeder’s position to announce that she’s leaving months in advance and before landing another job. Appointing an acting head of enforcement will help make the transition smoother.

“It avoids conflicts and it allows the department a chance to continue to do its job in a seamless and focused manner,” Ms. Gordy said.