FINRA Chairman and CEO Rick Ketchum seemingly touched upon "every topic under the sun" at Tuesday's CCOutreach National Seminar for Broker-Dealers.  And his bullet points hit their mark. Beginning with oversight of investment advisors and the fiduciary standard, Mr. Ketchum concluded with exam priorities.

C-I provides the following executive summary of FINRA's positions, as expressed by Mr. Ketchum.  For further details, go to:   [ Speech by FINRA's Ketchum, CCOutreach, 2/8] 

FINRA on Regulatory Reform.  

1.  Has long advocated more frequent examinations for IA firms, and the SRO is eagerly waiting for the decision by the SEC and Congress as to whether FINRA will be responsible for IA exams, or if another option is chosen.

2.  Fully supports a fiduciary duty for B/D's when providing investment advice, with ample disclosure of any conflicts of interest. 

3.  Customers want to receive more plain English disclosure about products and brokerage services.   New Account Agreements are enormous and essentially useless to customers.  FINRA proposed a rule that would require firms, at or prior to commencing a business relationship with a retail customer, to provide a written statement about account types and services provided, among other things - in effect, a document that's similar in purpose to Form ADV for advisers. 

Changes in FINRA's Exam Program and Other Reg'y Processes.  

1.  Member Application Program (MAP) Process Changes.   (i) a central MAP Group to manage the review of all new and continuing membership applications;  (ii) technology-based initiatives such as e-submission for all continuing applications.

2.  Exam Resources.   (i) a more risk-based approach;  (ii) an expanded coordinator program, including more continuous, ongoing conversations with member firms. 

Exam Priorities. 

1.  Fraud Detection.   (i) focusing on red flags during exams;  (ii) assessing affiliate activity, including how the affiliate interacts with the broker-dealer business and any conflicts of interest it may pose;  (iii) improved independent verification of customer and proprietary assets maintained at non-member financial institutions.

2.  Product Concerns.   Suitability! Suitability! Suitability!