Employing High-Risk Brokers Is Going to Cost More
FINRA is taking the next steps to strengthen controls on brokers with a history of misconduct and ensure greater accountability for firms that employ them.
The proposals:
- Expansion of Sanction Guidelines to enable adjudicators to consider more severe sanctions for those with a history of misconduct.
- Hearing panels that may restrict the activities of firms and individuals while a disciplinary matter is on appeal.
- Firms must adopt heightened supervisory procedures for brokers while a statutory disqualification request is under FINRA review or the broker is appealing a hearing panel decision.
- FINRA will increase the statutory qualification application fee for individuals and enact a new fee for firms to reflect the time it takes to properly screen applications.
- Guidelines for reviewing requests for a waiver will be revised to more broadly consider the past misconduct of an individual, including arbitration awards and settlements.
What does this mean?
If all the proposals are approved, firms are going to see their compliance costs and any sanctions increase as a result of employment of high-risk brokers. Compliance personnel will need to be properly trained to monitor high-risk brokers, procedures will need to be reviewed and updated, and additional staff will need to be hired for the increased supervision and oversight required.
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Author Bio
Leila Shaver is the Founder of My RIA Lawyer, a law firm that provides compliance and legal consulting for financial institutions. With extensive experience as a securities attorney and compliance expert, she has served as Chief Compliance Officer and General Counsel to RIAs, BDs, and TAMPs with billions in assets under management.
Leila understands the challenges RIAs face and is committed to helping RIAs streamline their processes, mitigate risks, and ensure compliance with regulatory requirements. She received her Juris Doctor from Atlanta’s John Marshall Law School and is a West Georgia Young Lawyers’ Association member. Leila has received numerous accolades for her work, including the Carroll County Bar Association’s Outstanding Young Lawyer Award in 2017.