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Tuesday
Nov012011

FINRA ordered by the SEC to strengthen internal control 

As reported by the Dealbook of New York Times on Oct 27 (EST), FINRA was asked by the SEC to overhaul its internal controls. The call has potentially damaged FINRA’s aspiration to become the foremost regulator of the US securities market and shake off the SEC’s established dominance. The issue arose in response to a routine inspection by the SEC of FINRA’s Kansas City office. Prior to the inspection, the director of the Kansas City office was alleged to have “caused alterations” of three staff meeting minutes just hours before the SEC team arrived.

Gerald Hodgkins, an enforcement official from the SEC, commented that internal compliance efforts at FINRA had not gone far enough to prevent such incidents. He noted that US law required FINRA to provide documents sought by the SEC in a complete and accurate form. FINRA was ordered by the SEC last week to hire an outside consultant to review its internal controls.

Ketchem from FINRA stressed that his agency had voluntarily reported the incident and had appointed a new leadership team for the Kansas City office and noted that the SEC had praised FINRA’s prompt reporting. 

See here for the Dealbook Report on SEC order 

 

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