Author: Bill Donnell, VP Sales [if there’s not a place to insert this in WP Backend, please insert directly into the post at the top, “By: Bill Donnell, VP Sales at InvestorCOM”

Attending the recent SIFMA C&L Regional Conference in New York City, I had the privilege of gaining valuable insights from industry experts on the 2024 exam priorities and findings. Moderated by Saima Ahmed, the panel featured key figures from FINRA, including Stephanie Dumont, Bill St. Louis, and Greg Ruppert.

One of the major takeaways from the conference was the emphasis on transparency and collaboration within FINRA. Bill St. Louis, in particular, highlighted five key focus areas for FINRA in 2024. Firstly, there is a concerted effort to improve regulatory operations by fostering collaboration and eliminating duplications internally and with other regulators. Transparency across the enterprise is also a key goal, ensuring clear communication and understanding of regulatory processes.

Examiners are now honing in on data analytics, with a commitment to sending examiners for specialized training. Additionally, there is a push to address case aging, aiming to expedite the resolution process by increasing communication and touchpoints with firms. St. Louis stressed the importance of maintaining focus on bad actors, especially those targeting senior and end investors.
Regulation Best Interest (REG BI) emerged as a central theme of discussion. St. Louis highlighted that excessive trading cases will be a focal point, with two firms already expelled due to failures in this area. The duty of care space, over-concentration, and issues related to non-traded REITs and private placements were also flagged as areas of concern.

A critical aspect of REG BI that was emphasized is the need for proper documentation and procedures. Firms are urged to move away from generic policies copied from external sources and tailor them to their specific needs. The lack of understanding around products, both from investors and advisors, was identified as a recurring issue. Failures to disclose conflict of interest information, such as relationships with family or board members, were also highlighted.

The discussion further delved into the coordination between FINRA and the SEC regarding REG BI. Greg Ruppert provided insights into the collaborative efforts, suggesting that firms can expect to hear from fewer regulators. The focus has shifted towards conducting rigorous RAA examinations, ensuring suitability, and evaluating whether representatives truly understand the products they recommend.
A key point of concern raised during the panel was the need for tailored policies and procedures. Advisors are urged to move away from the practice of copying policies from external sources and instead create procedures that are specific to their firms. The importance of setting up advisors for success by conducting RAA analyses before making recommendations was emphasized, highlighting the significance of internal security training.

The SIFMA C&L Regional Conference provided a comprehensive overview of the regulatory landscape in 2024. The commitment to transparency, collaboration, and a focus on addressing specific issues within REG BI underscored the industry’s dedication to adapting and evolving in the face of changing regulatory dynamics.