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Common Exam Findings

Monday, July 31, 2017

To educate Firms on common exam problems examiners are “seeing consistently,” John Hickey, deputy director of FINRA’s New York district office, recently identified a few of the most common findings from examiners reports.

Outside Business Activities

Firms have become better at collecting Outside Business Activities. However, Firms are not performing a deep dive into the data in their possession and/or performing periodic reviews to determining if the data is still accurate.

Branch Inspections

Firms are not performing regular periodic inspections of their compliance programs. If an inspection is performed, it is likely the inspection was not comprehensive enough to discover potential gaps in their compliance program.

Anti-money laundering

Examiners noted that firms are not performing all necessary steps for a comprehensive AML program. Some of the common deficiencies encountered are frequency of surveillance reviews as well as following up timely on alerts that may be received.


For firms that outsource their compliance services, examiners have found numerous occasions where the firm did not have procedures to accurately review the vendor. If procedures were in place, the procedures were not always followed.

In addition, ensuring procedures are followed, it is important to verify the data intended to be stored at the third-party has been received by the third-party and has been captured as intended.

Excessive Trading and Churning

When a Firm conducts a review of trading activity, often the review is not comprehensive or follow the policies and procedures listed out in the Firm’s Compliance manual.

The items listed above are just a few of the common exam findings that have been noted by examiners. Compliance officers should periodically review their compliance program to ensure it is comprehensive. Red Oak can help firms by performing their annual 3120 review or by performing an overall gap analysis.

About Red Oak Compliance Solutions

Red Oak Compliance Solutions is a leading provider of intelligent compliance software, offering a range of AI-powered solutions designed to help firms of all sizes successfully navigate the increasingly complex regulatory landscape. Our suite of 17(a)-4/WORM compliant features offer risk minimization, cost reduction, and process optimization capabilities with features that are designed to evolve with our client’s needs. Our flagship advertising review software enables firms to deliver compliant content to the market with confidence, faster. Our Disclosure Management and Intelligence solution simplifies the management of disclosures, while our Registration Management solution automates and streamlines the licensing and registration process, further enhancing your internal processes. 

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