FINRA Launches Information Sweep on Firm Culture

FINRA Launches Information Sweep on Firm Culture

The Financial Industry Regulatory Authority (FINRA) is seeking information from more than a dozen broker/dealers on the policies and procedures that go toward establishing their firm’s “culture.”

In addition to the letters sent to firms this week, FINRA is also planning to gather details on culture during upcoming firm audits, spokeswoman Michelle Ong said.

“Our goal is to better understand industry practices and determine whether firms are taking reasonable steps to properly establish and implement their own cultural values within the firm,” the regulator stated in the letter posted to its site on Thursday. “Knowing firms’ practices in this area, and the challenges they face, will help FINRA develop potential guidance for the industry and determine other steps that could be taken.”

This latest move comes after the Wall Street regulator listed firm culture as a 2016 examination priority. FINRA has defined culture as firm norms—those practices and behaviors within the workplace that have a “profound influence” on how firms run their business and manage conflicts.

FINRA is asking firms to provide information around eight general areas, including the polices in place that establish firm culture, how those core values are communicated and in what ways the firm measures and assesses the impact of those standards.

Additionally, FINRA is asking firms for descriptions of how management handles any misconduct related to violating cultural values and how firms reinforce values (implicitly or explicitly) through compensation, promotions and other rewards.  

Firms have until March 21, 2016 to respond completely to the regulator’s inquiries.

TAGS: Industry Blogs
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