The Financial Industry Regulatory Authority (FINRA) recently released its 2019 Report on Examination Findings and Observations. The report intends to reflect key findings and observations identified in FINRA's recent examinations of broker-dealers. The report also describes practices that FINRA has deemed to be effective and that could help firms to improve their compliance and risk management programmes.
The Securities and Exchange Commission recently charged a Switzerland-based securities dealer for offering and selling unregistered security-based swaps to US investors using bitcoins and for failing to transact its swaps on a registered national exchange. This case illustrates that the use of new technology and terminology does not exempt investment-product dealers from having to comply with US federal securities laws.
The Financial Industry Regulatory Authority recently censured and fined a Florida-based broker-dealer, including for failing to reasonably supervise sales of complex securities such as structured products and leveraged, inverse and inverse-leveraged exchange-traded funds. This case illustrates the need for broker-dealers to establish and enforce proper surveillance systems and written procedures to ensure the suitability of their sale recommendations.