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FINRA's 2023 Priorities, Emerging Topics, and Effective Practices

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FINRA's 2023 priorities, emerging topics, and effective practices discussed.

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The Financial Industry Regulatory Authority (FINRA) is a non-profit organization authorized by Congress to protect investors by making sure the broker-dealer industry operates fairly and honestly. FINRA's mission is to ensure the integrity of the markets, promote fairness, and protect investors. FINRA is the largest independent regulator for all securities firms doing business in the United States.

Todd Anthony Cirella is a broker with Laidlaw & Company, a FINRA-registered firm. Cirella's been in the industry since 1993 and with Laidlaw since 2001. He is currently responsible for a number of FINRA-related activities, including supervising securities transactions, reporting customer complaints, and advising clients on investments.

FINRA's 2023 priorities continue to include topics such as AML, cybersecurity, net capital, communications, and sales practices (including the sale of structured products and margin trading). FINRA also plans to focus on improving the quality and effectiveness of the regulatory review process and will continue to monitor the impact of technological change on the industry.

FINRA identified the following emerging topics and effective practices relating to market surveillance activities: Manipulative Trading. Best Execution and Execution Quality. Market Data and Access. Pre-trade and Post-trade Surveillance. Trade Reconstruction.

In addition, FINRA has identified a number of key topics that must be addressed in order to ensure the integrity of the markets and protect investors. These topics include: Insider Trading and Market Abuse. Market Manipulation. Market Structure and Trading Practices.

Raymond James & Associates Inc. has settled Finra charges that it sent clients at least 1.85 million inaccurate trade confirmations over an eight-year period. The regulator found that the broker-dealer failed to provide investors with accurate and complete information about their transactions.

Turner's customers lost most, if not all of the money that they had invested in the “fixed annuity,” Finra said. The ex-broker violated his fiduciary duty to his customers by failing to provide them with accurate information about the product.

The Financial Industry Regulatory Authority (FINRA)'s head of enforcement, Jessica Hopper, who has served with the US brokerage regulator for over 10 years, recently announced the addition of several new enforcement initiatives. These initiatives aim to strengthen FINRA's ability to identify and punish misconduct in the securities industry.

But according to FINRA, the procedures at Securities America, Royal Alliance and SagePoint neither highlight these options for clients, nor do they address the need to monitor the activities of sales representatives. FINRA has ordered the firms to make changes to their procedures and policies to ensure that customers are provided with these options.

In a settlement, FINRA said the firm mistakenly believed that third-party b/ds executing the trades were responsible for spotting potential conflicts of interest. The firm also failed to ensure that the notifications properly disclosed the actual risks associated with the transactions.

FINRA remains very focused on preventing financial exploitation of seniors and other investors. Firms can expect to see senior investor-related enforcement actions from FINRA in the near future.

FINRA has also recently announced plans to expand its market surveillance activities in order to better protect investors. The regulator plans to use predictive analytics and machine learning to identify and investigate potential misconduct.

In addition, FINRA is currently working on a new rule that would require brokers to inform customers of their right to obtain a copy of their customer records. This rule will help investors understand the types of transactions they've engaged in and help them better protect themselves from potential fraud.

FINRA is also developing a new rule that would require firms to keep accurate records of customer communications, which would help ensure that investors are fully informed about their transactions and any potential risks.

finra2023prioritiesemerging topicseffective practicesamlcybersecuritynet capitalcommunicationssales practicesmanipulative tradingbest executionexecution qualitymarket data and accesspre-tradepost-trade surveillancetrade reconstructioninsider tradingmarket abusemarket manipulationmarket structuretrading practicesraymond james & associatesfixed annuityfiduciary dutyjessica hopperenforcement initiativessecurities americaroyal alliancesagepointthird-party b/dsconflicts of interestfinancial exploitationpredictive analyticsmachine learningrulecustomer recordscommunications

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