CCO Resource Hub: FINRA Examination Materials
Chief Compliance Officer Committee
FINRA Examination Materials
FINRA, which is a self-regulatory organization authorized under the Securities and Exchange Act of 1934, regulates the conduct of Federally-registered broker-dealers and their representatives. It does so by both adopting rules that govern activities of the broker-dealers and its representatives (which rules must be approved by the SEC) and conducting inspections of its members to ensure their compliance with the Federal securities laws and FINRA’s rules. All Federally-registered broker-dealers are required to be a member of FINRA and, to obtain such membership, the broker-dealer must first apply and be vetted by FINRA. [A broker-dealers’ representatives must be separately registered with FINRA.] Members and their representatives that are found by FINRA or the SEC to violate the Federal securities laws or FINRA’s rules may be sanctioned by FINRA or the SEC in an enforcement proceeding. Sanctions at these proceedings may involve penalties up to and including suspensions and bars. Importantly for the mutual fund industry, FINRA’s rules only apply to broker-dealers and not to other entities within a mutual fund complex. Because many complexes include a broker-dealer, members of the CCO Committee are interested in what FINRA focuses on in conducting its broker-dealer exams. Unlike the SEC, FINRA does not publish detailed document lists. Instead, it typically requests documents in a piece-meal fashion, which starts with an Initial Exam Request, which is then supplemented by additional requests during the weeks/months that the exam lasts. These supplemental requests tend to be tailored to the business conducted by the particular exam subject. Below are links to documents that reflect information that may be sought during FINRA’s Initial Exam Request: