WASHINGTON -- If you're not happy with how FINRA functions, CEO Robert Cook wants to hear from you.
Cook is engaged in a "comprehensive, organization-wide top-to-bottom review" of FINRA's programs and operations. And because Cook is encouraging an aggressive approach, his efforts could result in major changes for the heavily regulated wealth management business.
"Everything must be on the table," Cook told attendees at FINRA's annual conference. "We have to avoid incrementalism or convenient compromises when bold action is required. This may not always be comfortable. While our changes must have a clear purpose and be workable in implementation, we cannot shy away from ambitious initiatives that will help us better achieve our mission."
After taking over as head of the regulator in August, Cook began what he calls a "listening tour" to meet with broker-dealers and other stakeholders, and has since launched FINRA360, a formal, multi-year review initiative to reassess FINRA's regulatory operations, its use of data and technology, and the metrics the regulator uses to evaluate its success.
In response to feedback from the industry, the regulator is currently evaluating whether to combine the distinct enforcement units in its member regulation and market regulation groups.
And as part of its broader review, FINRA is exploring new ways to better communicate with broker-dealer firms in a bid to facilitate compliance. In the enforcement component of that program, Cook said FINRA is committing "to take a fresh look at what we do today and to provide greater transparency and guidance."
Regulators have revealed what kind of issues advisors must address if faced with a review.
This week, FINRA announced its
Taken together with the regulatory guidance that FINRA publishes, the FINRA360 initiative is aimed at "finding better ways to help firms comply with the rules," with a particular focus on smaller brokerage shops.
"There are clearly concerns that many small firms have about compliance," Cook said. "We have to look at what is it about our rules that may impede small business."
TOO MANY REGULATIONS?
Cook is also pledging to ramp up FINRA's retrospective rule review, where the regulator combs through its rule book to reassess whether an existing regulation needs to be updated or scaled back.
Just this week, FINRA began re-evaluating its rules governing outside business activities and private securities transactions.
An industry recruiter said the Bank of America subsidiary has become almost "unhinged" with the amount of money it's willing to offer advisors it's recruiting.
Brendan Brothers is the executive vice president for Financial Crime Management Technology with Nasdaq. He is also a co-founder of Verafin, which provides financial crime prevention tools.
After a decade-long effort by holders of the personal financial specialist credential, aspiring candidates can be tested on investments, retirement plans and other areas.
"Regular rule reviews can help us understand whether those rules can be made more effective and less burdensome, and also identify gaps in areas where investor protections can be strengthened," Cook said.
Separately, Cook also set as a key priority scrutiny of high-risk brokers and efforts to remove bad actors from the industry, an area where FINRA is "devoting considerable resources."
Last week,
"We share a common goal in this area," Cook said. "And I call on all of you to continue to work constructively with us to put in place whatever measures are required to ensure that investors can have confidence in their investment professionals and that bad actors are removed from the industry."
