Robert Errico, head of member regulation at the
Financial Industry Regulatory Authority Inc., will be leaving the organization at the end of March.
Mr. Errico was responsible for ongoing surveillance and annual examinations of broker-dealer firms.
"Bob has led our examination program through the most challenging period in the history of the organization," said Stephen Luparello, Finra vice chairman, in a memo sent to Finra staff on Tuesday announcing Mr. Errico's departure.
"We plan to begin our search to fill his position immediately," Mr. Luparello said.
Mr. Errico will continue to work with Finra as a senior advisor to help with the transition, the memo said.
Herb Perone, Finra spokesman, confirmed the memo but declined further comment.
Mr. Errico was not universally admired among member firms and Finra staff.
When Mr. Errico took over member regulation in 2003 at Finra predecessor NASD, the oversight of broker-dealers "took a turn for the worse," said Alan Wolper, a former head of Finra's Atlanta district office, and now an attorney at Locke Lord Bissell & Liddell LLP.
After 2003, when the research-analyst scandal exploded, regulators were embarrassed, and began focusing more on enforcement and less on helping broker-dealers comply with rules, Mr. Wolper said.
Mr. Errico "was complicit" in that effort, he said.
In 2007, following the formation of Finra through the merger of NASD and the NYSE's regulatory unit, Mr. Errico's role was refocused on sales-practice compliance. Grace Vogel, who headed member firm regulation at the NYSE Regulation, was given responsibility for risk and operational oversight.
Over the past year or so, Mr. Errico has warned Finra members against potential compliance lapses in the face of the economic downturn. In a letter about exam priorities to its more than 5,000 broker-dealer members, Mr. Errico and Ms. Vogel warned broker-dealer executives not to neglect "non-income-producing areas of business" and to consider carefully the affect of layoffs or potential layoffs.
Mr. Errico and Ms. Vogel added that “while firms maintain the discretion to determine the adequacy of head count, we recommend that they carefully consider the impact of head count reductions in such areas as compliance, finance and operations, and other control functions."
