FINRA's Department of Enforcement Explained

Michael Volpe

After spending a decade in finance, Michael Volpe has been a freelance investigative journalist since 2009. His work has been published locally in the Chicago Reader, Chicago Crusader, Chicago Heights Patch, and New City. Nationally, Volpe's work has appeared in a wide variety of publications including the Washington Examiner, the Daily Caller, Crime Magazine, the Southern Christian Leadership Conference Newsletter, and Counter Punch. Volpe has been recognized by whistleblowers as leading the charge in getting their stories out. His first book Prosecutors Gone Wild was published in October 2012, his second book The Definitive Dossier of PTSD in Whistleblowers was published in February 2013 and his third book Bullied to Death was published in August 2015.

regulatory

FINRA’s Department of Enforcement Explained

October 8, 2019

Department of Enforcement The Department of Enforcement within FINRA, the Financial Industry Regulatory Authority, has four units, a key reform from 2018.

Lizzie Hogan is the Senior Vice President of Market Regulation Enforcement, one of the three units with the Department of Enforcement, and she was the latest guest on FINRA’s podcast “Unscripted”.

The other three units are Corporate Financing, the Office of Fraud Detection and Market Intelligence, and Advertising Regulation.

FINRA’s Department of Enforcement is led by Susan Schroeder. 

Hogan noted on the podcast that she came on board at FINRA shortly after the market structure was announced in July 2018. 

She explained of Market Regulation Enforcement, “We bring cases from investigations and examination that were developed by our counterparts in the quality of markets, options regulations and the TFCE program in Market Regulation.”

She said her unit has a staff of fifty attorneys and paralegals and has offices in Rockville, Maryland, New York City, New York, and Chicago, Illinois. 

She said that the reorganization was done by the Department of Enforcement, “were to improve consistency and transparency.”

She continued, “Historically, a case on a very similar set of facts and the same rule violations could look very different if it was brought by legacy market reg legal as opposed to a case brought by the sort of main office enforcement. So, by integrating market reg legal into enforcement, we are aligning our cases both in scope and consistency of outcomes.”

She also explained why her group is important within the larger enforcement group, “Our team has very specialized knowledge of the rules impacting the markets. So, for example, a number of members of our staff were previously employed by one or more of the exchanges. They’ve also managed cases for many years for the various exchanges and of course, that requires them to have a very strong understanding of the exchange specific rules that govern member firms and their activity on those markets.”

This is important because FINRA has agreements with several of the US exchanges to bring cases on the exchanges behalf and that function is left to Hogan’s group. 

Each exchange must have its own regulatory arm and, in fact, FINRA was formed in 2007 when the regulatory arms of NYSE and NASD merged. 

Hogan said her group receives referrals for cases to prosecute primarily from three groups: Quality of Markets Department, Options Regulation Team, and the Trading and Financial Compliance Exam Team. 

Prior to joining FINRA, Hogan was in the Securities Litigation and Enforcement Practice Group at WilmerHale.

“Her practice focused on regulatory investigations, enforcement actions and litigation concerning compliance with the federal securities laws, as well as equities market structure issues, including high frequency, algorithmic and complex trading systems,” according to her biography at FINRA

WilmerHale is one of the premier law firms in the US; Robert Mueller was recently announced as rejoining the firm as a partner. 

Mueller was previously the head of the Federal Bureau of Investigation and for approximately two years he was the special counsel investigating alleged ties between the Trump campaign in 2016 and Russia. 

Mueller was a partner at WilmerHale when he was made the Special Counsel in 2017; the firm recently announced he would accept his old position now that the investigation has completed. 

Susan Schroeder also appeared on “Unscripted” and that podcast can be found here. 

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