FINRA360 Delivers Early Results09.07.2017
It has been a busy and productive first year for Robert Cook as president and CEO of the Financial Industry Regulatory Authority.
Stepping into his new role in August 2016, Cook spent much of his early days on a listening tour speaking with FINRA member, investors, and other stakeholders.
As a result from what he had heard on his tour, the regulator launched its FINRA360 multi-year self-evaluation of how the self-regulatory organization can continually improve its performance in March.
Since then, the self-regulatory organization created a project management office to implement the work related to the initiative. The PMO has launched various work streams to address specific topics. FINRA senior management supervises all work associated with FINRA360 while its Board of Governors periodically reviews the work, according to officials.
Cook shared some early results of the FINRA360 program when he testified before the House Committee on Financial Services’ Subcommittee on Capital Markets, Securities, and Investment on September 7.
“More than a set of specific proposals, FINRA360 provides a process for carefully considered-but ambitious-changes and improvements throughout FINRA,” noted Cook in his written testimony.
The SRO restructured its enforcement organization in July and merged the enforcement team that handled trade-related disciplinary actions uncovered by FINRA’s market surveillance and examination programs and a separate team that handled cases referred from other regulatory oversight divisions within FINRA.
“On listening tours and in forums, I heard that stakeholders could experience these units as two different regulators,” said Cook. “Our internal analysis also identified this structure as a potential area for improvement to address duplicative operations and sometimes different approaches to managing our enforcement activities.”
The regulator also has named Susan Schroeder as head of the enforcement division in the same month. In her new role, Schroeder reports directly to Cook and is also part of FINRA’s management committee.
Additionally, the SRO issued a Special Notice on Engagement in March to help improve the way it seeks input from its member firms, investors, and the public.
“Improving these mechanisms, in turn, will help us better collect and consider feedback on the many other areas that we are reviewing under FINRA360,” said Cook.
The agencies found a shortcoming related to data quality and data management.
Technology does not change the need for transparency in corporate structures, governance, audit and controls.
Blockchain technology can be compatible with the existing federal securities law framework.
The Committee expects to hear from companies and individuals, including Sam Bankman-Fried, in December.
Congresswoman Maxine Waters is chair of the House Financial Services Committee.