2017 Regulatory and Examination Priorities Letter

Posted on April 13th, 2017 at 3:13 PM
2017 Regulatory and Examination Priorities Letter

From the Desk of Jim Eccleston at Eccleston Law LLC:

This is the first in a series of posts to discuss FINRA’s 2017 Regulatory and Examinations Priorities Letter. FINRA’s 2017 letter provides information about areas FINRA plans to review in 2017 based on observations from its regulatory programs as well as input from various stakeholders, including member firms, other regulators and investor advocates.

To begin, FINRA will assess how firms conduct suitability reviews by examining how different firms vet products, supervisory systems and controls to review recommendations. As a result, FINRA recommends that firms require training for their registered representatives, compliance and supervisory staff to ensure that they understand the objectives, risks and pricing factors of the products they sell.  Furthermore, FINRA also will increase its focus on how firms monitor concentration in its customers’ accounts.

In the letter, FINRA also stated that concerns with suitability and concentration can arise with many products. These products include speculative energy-based investments, complex or novel exchange-traded products (ETPs), structured retail products, leveraged and inverse exchange-traded funds, non-traded real estate investment trusts (REITs), and unlisted business development corporations (BDCs). In addition, FINRA writes that although these products may be suitable for some customers, certain products are not appropriate because of certain risk factors. Given those concerns, FINRA plans to ensure that firms perform and supervise customer specific suitability determinations.

The attorneys of Eccleston Law LLC represent investors and advisers nationwide in securities and employment matters. The securities lawyers at Eccleston Law also practice a variety of other areas of securities for financial investors including Securities FraudUnauthorized TradingBreach of Fiduciary DutyRetirement Planning Negligence, and much more. Our attorneys draw on a combined experience of nearly 65 years in delivering the highest quality legal services. If you are in need of legal services, contact us to schedule a one-on-one consultation today.

Related Attorneys: James J. Eccleston

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