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Are you facing disciplinary action after a FINRA audit?

On Behalf of | Oct 28, 2021 | Administrative Law |

As someone who has already gone through becoming an investment adviser representative (IAR) here in Kentucky, you know that registering to practice in your profession isn’t easy. There are a variety of testing requirements, criminal background and consumer report reviews you must undergo and surety bonds that you must put up to prove to the Kentucky Department of Financial Institutions and Securities and Exchange Commission (SEC) that you warrant a license. 

The Financial Industry Regulatory Authority (FINRA) often works on behalf of the SEC to impose fines or penalties for regulatory or ethics violations. No matter your role, whether it’s as a wealth management advisor or a registered investment advisor (RIA), you have certain annual filing requirements. 

While FINRA doesn’t audit RIAs, they ensure regulatory compliance and audit the work of broker-dealers

What is the purpose of a FINRA audit?

The main goal of FINRA audits is to verify that a broker-dealer’s accounting is accurate. As a result, FINRA may:

  • Try to determine where investment funds originate and their target destination
  • The quantity of funds that the broker-dealer brought in and pushed out
  • Whether client investment advice was suitable
  • Whether there was any theft that took place

FINRA audits aren’t solely focused on accounting, though. They may also involve:

  • The analysis of advertising to ensure its accuracy
  • Random examinations to ensure an understanding of nuances in the field
  • Analyses of a broker-dealer’s log of continuing education class completion records

You worked hard to get to where you’re at in your career. You’ll want to take any administrative law proceeding you may be asked to attend seriously, or otherwise; you might have to start thinking about an alternate career.