Experienced professionals assisting broker-dealer and registered investment adviser clients with membership applications, regulatory issues and inquiries, and compliance.
Experienced professionals assisting broker-dealer and registered investment adviser clients with membership applications, regulatory issues and inquiries, and compliance.
In May, FINRA announced that it will review firm practices related to supervision of higher-risk structured products. Structured products are designed
to meet specific investment objectives for retail investors, such as growth, income, or risk management. They typically combine a traditional security,
like a bond, with a derivative component
FINRA is conducting a review of firm practices related to supervision of concentrations in non-principal-protected "worst-of" structured notes, a higher-risk
structured product.
The regulatory review specifically evaluates how firms comply with Regulation Best Interest (Reg BI), particularly regarding care and conflict of interest
obligations. Firms are currently being evaluated on their Written Supervisory Procedures (WSPs), the criteria used for supervisory alerts, and how they
categorize products based on risk. Furthermore, FINRA is examining how firms identify and mitigate conflicts of interest related to the compensation representatives
receive for selling these notes. While the review may only directly affect a subset of member firms, all organizations recommending structured products are
encouraged to evaluate their training, guidance, and internal controls to ensure they meet heightened supervisory expectations.
How Diles Consulting Can Help
• Diles Consulting is uniquely equipped to assist broker-dealers and registered investment advisers in navigating these complex regulatory challenges.
Led by Founding Principal Colleen Diles, who offers over 25 years of industry experience, including 22 years within FINRA's Member Supervision Department,
our company provides unparalleled expertise in evaluating the effectiveness of internal controls. Diles Consulting can help your firm establish a supervisory
system reasonably designed to achieve compliance with Reg BI and FINRA rules. Whether you require assistance responding to regulatory inquiries, refining
your WSPs, or developing audit-ready compliance solutions, Diles Consulting delivers the strategic guidance necessary to manage the complexities of today's
dynamic regulatory landscape with confidence.
Read More