FINRA Issues 2010 Exam Priorities Letter
FINRA has issued its 2010 annual examination priorities letter, highlighting areas of significance to FINRA’s examination program and including topics of “heightened importance to the Enforcement Department.” Under “Examination Priorities,” FINRA will review supervisory and compliance systems around fraud detection (e.g. how firms detect Ponzi schemes, etc.), information barriers (e.g. material non-public information), exchanges of variable annuities, protection of customer information particularly IT security, AML including independent testing, BCP and pandemic preparedness, supervision of outsourced vendors, collateral and inventory valuation, and short sale compliance. Some “Regulatory and Business Considerations” include sales of principal protected notes, integration of merged firms, sponsored access, life settlements, and firm liquidity.
OUR TAKE: The Exam Priorities Letter is a “must-read” for compliance professionals at broker-dealers and at investment advisers because the FINRA rules often serve as best practices for IA firms.