FINRA LISTS COMMON EXAM DEFICIENCIES
FINRA recently listed common exam deficiencies. Most significantly, FINRA criticized WSPs that merely recite the rule or a policy but did not include specific procedures defining how the firm would execute the policy. FINRA explained that procedures should define who is responsible, what such person is responsible for, the timing of responsibilities, and how policies will be implemented. FINRA also noted several other exam deficiency topics: AML testing (lack of independent testing), BCP (not tested and not updated), Regulation S-P (no confidentiality agreements with third parties), net capital calculations (especially valuation of inventory), and transaction reporting.
OUR TAKE: We have also seen many WSPs contain policies but no procedures. FINRA wants firms to treat their WSPs as an operating manual for compliance with the securities laws.