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Practical tips for satisfying FINRA’s “culture” concerns

Practical tips for satisfying FINRA’s “culture” concerns To analyze FINRA’s focus on broker-dealer culture in its 2016 annual priorities letter and the application of the concept in FINRA disciplinary proceedings, to explain how that focus will affect FINRA’s examinations of firms, and to provide recommendations as to how a firm can develop or improve its culture of compliance.Design/methodology/approachThis article examines FINRA’s current and historic pronouncements about “culture” in speeches, guidance, and decisions in disciplinary proceedings, and looks for common themes that should guide broker-dealers’ compliance.FindingsThis article concludes that even if the focus on culture might be regarded as an unnecessary overlay to the panoply of securities laws and regulations to which broker-dealers already are subject, firms should still take it seriously. It is now a focus of FINRA examinations for the purpose of fact-gathering, but FINRA might well elevate their concerns about culture into examination findings or worse.Originality/valueThis article gathers together all available information about the concept of firm “culture” and examines what aspects of the current focus represents legitimate concerns, and what aspects are unnecessary. The article takes the best of the guidance about culture and offers suggestions about how to improve a firm’s culture and, correspondingly, its compliance. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Investment Compliance Emerald Publishing

Practical tips for satisfying FINRA’s “culture” concerns

Journal of Investment Compliance , Volume 18 (1): 7 – May 2, 2017

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Publisher
Emerald Publishing
Copyright
© 2017 Morvillo LLP
ISSN
1528-5812
DOI
10.1108/joic-02-2017-0008
Publisher site
See Article on Publisher Site

Abstract

To analyze FINRA’s focus on broker-dealer culture in its 2016 annual priorities letter and the application of the concept in FINRA disciplinary proceedings, to explain how that focus will affect FINRA’s examinations of firms, and to provide recommendations as to how a firm can develop or improve its culture of compliance.Design/methodology/approachThis article examines FINRA’s current and historic pronouncements about “culture” in speeches, guidance, and decisions in disciplinary proceedings, and looks for common themes that should guide broker-dealers’ compliance.FindingsThis article concludes that even if the focus on culture might be regarded as an unnecessary overlay to the panoply of securities laws and regulations to which broker-dealers already are subject, firms should still take it seriously. It is now a focus of FINRA examinations for the purpose of fact-gathering, but FINRA might well elevate their concerns about culture into examination findings or worse.Originality/valueThis article gathers together all available information about the concept of firm “culture” and examines what aspects of the current focus represents legitimate concerns, and what aspects are unnecessary. The article takes the best of the guidance about culture and offers suggestions about how to improve a firm’s culture and, correspondingly, its compliance.

Journal

Journal of Investment ComplianceEmerald Publishing

Published: May 2, 2017

Keywords: Culture; Compliance; Financial Industry Regulatory Authority (FINRA); Broker-dealer; Securities enforcement; Examinations

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