A fascinating practice.
Wall Street’s vaunted self-regulator, FINRA, has been dealing with a lot of stuff lately. Stuff like highly unflattering Wall Street Journal articles, unpleasant scrutiny arising from said Wall Street Journal articles, the SEC getting its panties in a bunch over said Wall Street Journal articles, its own members getting their panties in a bunch when FINRA does things to try to avoid more embarrassing Wall Street Journal articles, sifting through all sorts of boring crap it’s been forced to ask for to the same effect, and maintaining an absolute state-of-the-20th-century-art website.
But CEO Richard Ketchum and his team took a little breather over the holidays and asked themselves, what does an industry rife with convicts, bankrupts, frequent and convenient changes of address and legends like Tommy Belesis say about that industry? Well, it occurs to FINRA that it might say some less than great things about the culture of that industry. One of FINRA’s New Years’ resolutions is to get to the bottom of it, and you know what they say about the unfailing record of New Years’ resolutions.
In outlining its annual regulatory and examination priorities, the Financial Industry Regulatory Authority said Tuesday that it will scrutinize the stated—and unstated—rules, policies, practices and behaviors that govern how such firms operate and interact with customers….
The heightened focus on culture is meant to go hand-in-hand with a deeper dive into sales practices at firms, including how firms are managing conflicts of interest that arise from selling certain investment products, said Finra Chairman and Chief Executive Richard Ketchum in an interview.
Oh yea, and in case you were planning on getting cute and having separate cultures for winners and losers, well, Richard Ketchum may not be way ahead of you. But he’s sort of on to you.
Having an appropriate culture includes “ensuring an environment where there isn’t a separate standard for high-producing” employees, said Mr. Ketchum.
In prior years, brokerage firms had generally leaned toward giving second chances to their so-called top-producers when violations were discovered. Depending on the alleged offense, this could mean a letter of reprimand on an adviser’s file, or ordering that the adviser submit to closer supervision or a suspension.