FINRA Launches Targeted Exam on Financial Firms’ Crypto Communications

Posted on November 28th, 2022 at 1:33 PM
FINRA Launches Targeted Exam on Financial Firms’ Crypto Communications

The Financial Industry Regulatory Authority (FINRA) has announced a targeted exam probing for more information as to how firms handled retail communications “concerning crypto asset products and services” after FTX recently filed for bankruptcy. 

The targeted exam notice, which was posted on FINRA’s website, defines July 1 through the end of September as the period in question. FINRA announced that it will target nearly 20 firms and request “all retail communications” concerning crypto assets. According to FINRA, a retail communication is “any written (including electronic) communication that is distributed or made available to more than 25 retail investors within any 30 calendar-day period.” Further, the definition applies to video, social media, mobile apps, and websites in addition to written communications. 

Additionally, FINRA asks firms to provide information for each communication, including the initial date that it was disseminated to the public, whether it was filed with FINRA’s Advertising Regulation Department (ARD), and whether a principal at the firm approved the communication. FINRA additionally requests that firms furnish written supervisory procedures relating to the “review, approval, record-keeping and dissemination” of the communications, including any relevant compliance policies or materials. 

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, regulatory and disciplinary matters.

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