SEC Needs to Improve Oversight of FINRA: GAO

 Commentary  December 16, 2021 at 07:44 AM  Share & Print

he Securities and Exchange Commission needs to take steps to improve its oversight of the Financial Industry Regulatory Authority, according to the Government Accountability Office.

Reviewing FINRA’s regulatory work, GAO said Wednesday, “is critical to SEC’s mission of protecting investors and maintaining fair, efficient markets.”

For instance, SEC reviews FINRA’s examinations of securities firms and may identify deficiencies.

However, GAO said that it found that the “SEC doesn’t have documented procedures for determining which deficiencies—and FINRA responses—to track.”

The SEC’s oversight of FINRA lacks “documented policies and procedures for determining which findings and any associated corrective actions to track, or for identifying and communicating the significance of findings from its oversight of FINRA to internal stakeholders and to FINRA,” GAO said.

“By establishing such measures, policies, and procedures, SEC would gain information that would allow it to better monitor and assess the impact of its reviews of FINRA, better evaluate FINRA responses, and more clearly communicate concerns to FINRA,” GAO said.

As it stands now, “SEC’s performance measures for FINRA oversight are task-oriented (such as conducting meetings) and do not reflect leading practices (such as being outcome-oriented and providing useful information for decision-making),” GAO states.

GAO recommended that the SEC establish performance measures for FINRA oversight “that reflect leading practices, and policies and procedures for tracking, identifying, and communicating the significance of examination findings.”


European Compliance Association

European Compliance Association

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