FINRA has a broad purview when it comes to examining and investigating firms, and enforcing regulations and rules, within the financial industry. There are nine areas of risk that continually arise in the discussions between FINRA and representatives of its member firms. These fall into two general categories: financial and operational risks; and sales practices and business conduct risks. These points came across in a panel discussion presented by FINRA, moderated by Chip Jones, FINRA’s Senior Vice President for Member Relations and Education, and featuring Bill Wollman, FINRA’s Executive Vice President for the Office of Risk Oversight and Operational Regulation, and Mike Rufino, FINRA’s Executive Vice President for the Office of Sales Practice. The panel discussion provided valuable insight for any fund manager with an affiliated broker-dealer, as well as all fund managers that trade with broker-dealers, about the principle risks those firms face. This article explores the nine risks outlined by the panelists. For more on FINRA, see “OCIE 2017 Examination Priorities Illustrate Continued Focus on Conflicts of Interest; Branch Offices; Advisers Employing Bad Actors; Oversight of FINRA; Use of Data Analytics; and Cybersecurity
” (Jan. 26, 2017); and “What the Record Number of 2016 SEC and FINRA Enforcement Actions Indicates About the Regulators’ Possible Enforcement Focus for 2017
” (Dec. 15, 2016).