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New FINRA Change to Exam Schedules: What Does This Mean for Small Firms?

Tuesday, August 13, 2019

No broker-dealer or investment adviser enjoys spending money on compliance. Let’s face it; it’s an investment that normally doesn’t improve returns. Although a challenge for smaller firms with minimal compliance budgets, FINRA’s new change in exam schedules makes it worth a conversation to spend (dare we say invest) more in compliance resources. 

Loosening regulations?! It’s almost unheard of and generally happens only when regulators have budget shortfalls. Fortunately, many small broker-dealers, who don’t show a history of being a danger to society, will receive an early Christmas present this year. Beginning with the next cycle of examinations, FINRA will start using more of a risk-based approach to its examination cycle. This change means examination schedules for smaller firms with no issues, should go from every two to three years, to every four years. That spend in compliance is starting to sound like a decent investment to improve future examination schedules. 

While there’s no way of knowing how long this reprieve will last, everyone in the industry should be on their best behavior so as to not have this new “privilege” taken away.  What are a few key items that you or a compliance resource can do? 

  • Review your current compliance systems to make certain they meet your needs
  • Identify any gaps that will leave you unprepared if and when an audit takes place 
  • Ensure your existing processes are effective and efficient for your needs 

For more on compliance and key topics, check out FINRA’s resources for small firms. 

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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