The constantly evolving landscape of third-party risks that are seen by Finra staff have been highlighted in its 2025 Regulatory Oversight Report.
The report differs from the regulator’s priorities letters that it published for many years and covers a broader range of topics that may help member firms to bolster their own compliance programs as part of Finra’s aim to support a healthy securities industry.
Among the topics highlighted in the report are several key risks to firms and investors including cybersecurity, AI, and investment fraud.
Some of the cybersecurity risks come from firms in the industry utilizing third-party technology providers for key systems and covered activities which could be vulnerable to a cyberattack or outage affecting a large number of firms.
The use of artificial intelligence by industry firms is increasing and Finra notes that while these tools have been used in financial services for several years and have multiple benefits for firms and investors, the report stresses the need to manage potential risks. Finra says it has observed that firms are proceeding “cautiously” with their use of Generative AI.
However, in a podcast published by Finra, Gregg Ruppert, executive vice president and head of member supervision, says there is increased risk within Automated Clearing House fraud that is “happening both by first party and third party actors, and then the adversarial use of the generative AI in order to amplify the threats to investors and firms.”
He added that Finra is engaging with firms to better understand how they are using GenAI and their compliance challenges.
Investment fraud by bad actors that directly targets investors is another area addressed in the report. This typically includes enticing victims to withdraw funds from their securities accounts and send the funds to the bad actors as part of a fraudulent scheme, the report finds.
Overall, the report covers 24 topics including extended hours trading, sales practice and Reg BI compliance, and rules concerning the Remote Inspections Pilot Program and Residential Supervisory Location designation.
“Monitoring the markets, anticipating and addressing risks, identifying and investigating trading violations, and leveraging data are all part of the important work that FINRA does to safeguard the integrity of our vibrant capital markets to ensure that everyone can invest with confidence,” said Stephanie Dumont, Executive Vice President and Head of Market Regulation and Transparency Services at FINRA. “Part of this work is reflected in our observations about manipulative trading, customer order handling and extended hours trading, among others, in this year’s Regulatory Oversight Report.”
A trustee says it has no record of the investor now suing it for $50 million
Legislation seeks to loosen access to private markets to include professional advice from RIAs and broker-dealers, not just income or net worth.
"I just feel like I can get a lot further [by] opening a 529 account," said one respondent to the BabyCenter survey on Trump accounts.
New ICI research shows these retirement savers pay expense ratios nearly matching industrywide averages, extending years of fee declines
UBS data show American net worth is shifting from property to cash and funds faster than in seven other wealthy nations.
Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income
Direct indexing is on pace to outgrow ETFs and mutual funds. Northern Trust's Ken Lassner explains why the advisors who get it wish they had started sooner.
