FINRA is consolidating some of its monitoring programs.
Bari Havlik is Executive Vice President of the newly named Member Supervision team, at FINRA, the Financial Industry Regulatory Authority.
She was the latest guest on FINRA’s podcast, Unscripted, where she talked more about the October announcement of a consolidation of risk monitoring programs, consolidating three examination teams into one office.
“Our Examination and Risk Monitoring program is central to our efforts to protect investors and guard the integrity of markets. After careful consideration and extensive feedback from internal and external stakeholders, we are moving toward a program structure that is based on the firms we oversee. By directing our expertise and resources in a more tailored way, we will become more effective at examining for compliance,” said FINRA President and CEO Robert W. Cookat the time of the original announcement. “Bari brings valuable perspective to her role at the helm of this transformation and, under her leadership, we have begun to create and implement a roadmap that thoughtfully and methodically builds towards the new structure.”
Havlik recently comes to FINRA with thirty years of compliance experience; she spent fourteen years as the Chief Compliance Officer at Charles Schwab.
She noted that in dealing with FINRA from the corporate end, a great FINRA strength was that it had a deep understanding of the firms they regulate, along with listening to their member firms.
Its main weakness was a lack of coordination, specifically Havlik said, there was a lack of coordination in these three examination teams, and this was the main reason for the consolidation.
She said the three examining teams would make duplicate requests for information, and sometimes, there would be two different conclusions from two different teams.
The teams would be. “duplicating efforts, not coordinating,” Havlik stated further.
Havlik also said there would be an enhanced commitment of a program that FINRA Chief Robert Cook implemented in January 2017, FINRA 360.
FINRA 360 is, “a comprehensive self-evaluation and organizational improvement initiative…to ensure that FINRA is operating as the most effective self-regulatory organization (SRO) it can be, working to protect investors and promote market integrity in a manner that supports strong and vibrant capital markets.” According to the FINRA site.
“It (FINRA 360) will be part of our DNA.” Havlik said.
With that, Havlik talked more about a progress report released for FINRA 360 in April 2018.
The progress report found that the examinations had improvements in: enhancement to their risk based programs, enhancements to information sharing, and improving processes for information requests.
Havlik said “it takes them to the next level,” referring to the consolidation of the offices continuing to build on improvements.
FINRA is a self-regulatory organization which governs trading on the NYSE and NASDAQ.
It was formed in 2007, when the regulatory arms of each exchange merged.
FINRA examinations are part of the compliance program for each firm which is a member of FINRA must do regularly.
FINRA notes on its site: “FINRA regularly examines all firms to determine compliance with FINRA’s rules and those of the SEC and the Municipal Securities Rulemaking Board (MSRB).
“During a routine examination, FINRA examines those aspects of a firm’s business that present heightened regulatory risk, as well as certain core areas. Specifically, FINRA examines a firm’s books and records to see if they are current and accurate. FINRA analyzes sales practices to determine whether the firm has dealt fairly with customers when making recommendations, executing orders, and charging commissions or markups and markdowns; and scrutinizes a firm’s anti-money laundering program, business continuity plans, and financial integrity and internal control programs. Similarly, firms go through a rigorous review for financial and operational compliance.”
