Understanding the Basics of the Examination Process (B2BC) Tuesday, May 16 11:15 a.m. 12:15 p.m.

Transcription

1 Understanding the Basics of the Examination Process (B2BC) Tuesday, May 16 11:15 a.m. 12:15 p.m. This Back to Basics Compliance session focuses on what you can expect during a FINRA cycle examination. It describes the steps involved in cycle examinations; explores FINRA s approach to riskbased examinations; outlines roles and responsibilities of members of the surveillance staff and examination team; highlights the expectations of the member firm staff; discusses strong practices observed by the examination staff; and summarizes the various types of examinations. Moderator: Erin Vocke Vice President and District Director FINRA Dallas and New Orleans District Offices Panelists: Donna DiMaria Principal, Chief Executive Officer and Chief Compliance Officer Tessera Capital Partners, LLC Don Winton Chief Operating Officer Crews & Associates, Inc Financial Industry Regulatory Authority, Inc. All rights reserved. 1

2 Understanding the Basics of the Examination Process (B2BC) Panelist Bios: Moderator: Erin C. Vocke is Vice President and District Director of the FINRA Dallas and New Orleans District Offices. Ms. Vocke began her career in 1995 as an examiner in the New Orleans District Office. During this time, she conducted numerous routine and cause examinations of member firms and focused examinations in the areas of variable products and mutual funds. In January 2004, Ms. Vocke became Supervisor of Examiners, where she performed supervisory functions, including reviewing examinations and providing guidance to examiners on case development. In August 2004, she relocated to the Florida District Office. At this time, she assumed responsibilities for supervising Continuing Membership Applications and financial surveillance of member firms, in addition to routine and cause examinations. In June 2007, Ms. Vocke transferred to the Dallas District Office as the Associate Director. In this position, she was responsible for overseeing the District Cycle, Cause, Financial Surveillance and Membership Application Programs. In February 2010, she assumed the role of District Director of the Dallas Office. In February 2014, she assumed the role of District Director in the New Orleans Office. Ms. Vocke completed the Accelerated Development Program in 2007 and the Certified Regulatory and Compliance Professional (CRCP) designation in She received a bachelor s degree in accounting from the University of New Orleans. Panelists: Donna DiMaria, Principal, CEO and CCO, launched Tessera Capital Partners, LLC ( Tessera ) in March Tessera is an independent third party marketing firm representing both traditional and alternative investment strategies to institutional investors and financial intermediaries. The firm is a member of FINRA and SIPC. Tessera also operates as a State Registered Investment Adviser and is registered as a Municipal Advisor with the SEC and MSRB. Ms. DiMaria is the founder of the firm and serves as the company s CEO and CCO. In this role she oversees the firm s compliance function and handles all of Tessera s due diligence. Prior to Tessera, Ms. DiMaria was the Director of Consultant Relations at WestAM where she also oversaw the firm s marketing support functions. Prior to joining WestAM, Ms. DiMaria was a Vice President at Forstmann-Leff International where she was responsible for US Consultant Relations and Institutional Sales. Before Forstmann-Leff, she was a Marketing Analyst and Fixed Income Product Specialist at UBS Asset Management. Prior to moving her career to the investment management industry, Ms. DiMaria was employed as an Investment Banking Analyst at Kidder Peabody and a MBS/ABS Accountant at Prudential Securities. Ms. DiMaria received a Bachelor of Science degree with a concentration in Finance from Binghamton University in May She graduated as a Stern Scholar with a Masters of Business Administration degree in Finance in May 1999 from NYU s Leonard N. Stern School of Business. Ms. DiMaria is the Chairman and Treasurer of the Third Party Marketers Association ( 3PM ), she was also formerly the President of 3PM, a position she held for more than 5 years. She currently sits on FINRA s Membership Committee, is a member of the National Society of Compliance Professionals ( NSCP ), and a member of Beta Gamma Sigma, the premier honor society recognizing academic excellence in business studies. She holds the Series 7, 24, 63, 65, 79 and 99 licenses and recently sat for the Series 50 pilot examination. Don Winton is Chief Operations Officer of Crews & Associates, Inc. and serves in several principal capacities within the firm which is a bank owned independent broker-dealer. His current responsibilities include managing the Client Services Group for Clearing & Operations. Mr. Winton managed the Taxable Securities trading desk and is actively responsible for personnel, training, branch activity and technology systems with the firm. Mr. Winton s participation in the firm's regulatory compliance agenda with our governing bodies led him to complete the FINRA Institute Certificate Program at Wharton where he earned his CRCP designation. Mr. Winton served on the FINRA District 5 Committee, currently serves as a FINRA securities industry arbitrator, and also participates in the FINRA District 5 Focus Group in New Orleans. Additional industry participation includes serving as a founding member of the Bond Dealers of America where he will soon complete his second term on the Board of Directors later this year. In addition, he currently serves on the Executive Committee with the Regional Municipal Operations Association (RMOA) Financial Industry Regulatory Authority, Inc. All rights reserved. 2

3 FINRA Annual Conference May 16-18, 2017 Washington, DC Understanding the Basics of the Examination Process (B2BC)

4 Panelists Moderator Erin Vocke, Vice President and District Director, FINRA Dallas and New Orleans District Offices Panelists Donna DiMaria, Principal, Chief Executive Officer and Chief Compliance Officer, Tessera Capital Partners, LLC Don Winton, Chief Operating Officer, Crews & Associates, Inc. 1

5 Agenda FINRA Examination Overview FINRA Risk Assessment Process Pre-Examination Process Onsite Examination Process Post Examination Process Regulatory Coordination FINRA Oversight Process 2

6 FINRA Examination Overview Types of FINRA Examinations Regulatory Service Agreements Municipals Securities Rulemaking Board (MRSB) SEC/Municipal Advisors 3

7 Risk Assessment Process Firms are assessed periodically based on nine risks: Operational Risk Credit Risk Liquidity Risk Market Risk Accuracy of Net Capital Segregation of Client Assets 4

8 Risk Assessment Process Money Laundering Risk Sales Risk Fraud and Deception Risk 5

9 Pre- Examination Process Examination Timeline Gateway / Request Manager Examiner and Coordinator Examination preparation Best Practices Announcement Calls Request Manager Firm personnel and staffing 6

10 Onsite Examination Process Establishing schedules for meetings/interviews Who should attend Status meetings Frequency Exit Meeting 7

11 Post Examination Process Responding to the Exit Meeting Report Wrap Up Management Review Potential Dispositions Disposition consultations 8

12 Post Examination Process Responses Best Practices Implementation of changes/ recommendations Benefits of Examinations 9

13 Additional Items Regulatory Coordination FINRA Oversight Process 10

14 Resources 2017 Regulatory and Examination Priorities Letter Target Exam Letters A Few Minutes With FINRA Nine Risks that Inform FINRA s Examination and Surveillance Program What to Expect Series 11

15 Understanding the Basics of the Examination Process (B2BC) Tuesday, May 16 11:15 a.m. 12:15 p.m. Resources FINRA Resources 2017 Regulatory and Examination Priorities Letter Targeted Exam Letters Webpage (FINRA and other regulators conduct targeted exams, known as sweeps, to gather information and carry out investigations. Sweep information is used to focus examinations and pinpoint regulatory response to emerging issues.) A Few Minutes With FINRA Nine Risks that Inform FINRA s Examination and Surveillance Program What to Expect Series Financial Industry Regulatory Authority, Inc. All rights reserved. 1