FINRA’s three examination functions will be consolidated into a single, unified program beginning with 2020 exams, according to a Dec. 12 announcement.
Fulfilling a process that was announced in October 2018 as part of its FINRA360 initiative, the self-governing organization that regulates more than 3,600 firms and 630,000 individual brokers also announced the senior leadership team under the new examination and risk monitoring structure.
The consolidation will bring FINRA’s three existing exam programs – business conduct, financial and trading compliance – under a single framework “designed to better direct and align examination resources to the risk profile and complexity of member firms,” the organization notes.
In the new program, all FINRA member firms will be grouped into one of five business models:
- Retail
- Capital Markets
- Carrying and Clearing
- Trading and Execution
- Diversified
Each grouping will be headed by a senior leader and has several sub-groups to more precisely categorize firms with similar business models and activities. Each firm also will be assigned a “single point of accountability” who has responsibility for the ongoing risk monitoring, risk assessment, planning and scoping of examinations tailored to the risks of a firm’s business activities, the announcement explains.
FINRA notes that in the coming weeks it will notify each member firm of its single point of accountability and its new risk monitoring teams.
“Implementing a unified program structure will help make us a more agile and risk-focused regulator, able to direct our expertise and resources in a more tailored way,” explains Bari Havlik, Executive Vice President, Member Supervision. “As a result, we expect to continue to become more effective at examining firms for compliance and protecting investors.”
As announced previously, exams under FINRA’s Regulatory Service Agreements (RSAs) with exchange clients will be performed by a separate unit housed in the organization’s Market Regulation Department. Market Regulation will also have responsibility for executing exams for the Trading and Execution firm grouping, working in coordination with the consolidated FINRA Examination and Risk Monitoring team.
Senior Leadership Team
The senior leadership team overseeing Member Supervision’s exam and risk monitoring functions and reporting directly to Havlik consists of:
- Tom Nelli, Senior Vice President, who will lead the teams responsible for executing the examinations, setting standards across the firm groupings and quality assurance testing;
- Ornella Bergeron, Senior Vice President, who will lead the teams for the “Carrying and Clearing” and “Diversified” firm groups;
- Bill St. Louis, Senior Vice President, who will lead the teams for the “Retail” and “Capital Markets” firm groups; and
- Tim Thompson, Senior Vice President, who will lead the teams for the “Trading and Execution” firm group. He also will remain a part of Market Regulation’s Trading and Financial Compliance Examination team.
Also reporting directly to Havlik as Member Supervision leaders will be:
- Kerry Gendron, Senior Vice President, Data Analytics and Technology Strategy;
- Ursula Clay, Senior Vice President and Chief of Staff, who will lead the Core Functions teams;
- Mike Rufino, Executive Vice President, who will continue to serve as a Senior Advisor focusing on investor protection issues; and
- Bill Wollman, Executive Vice President, who will lead a new Office of Financial and Operational Risk Policy within FINRA’s Office of General Counsel.
FINRA announced in August that Cam Funkhouser, Executive VP of the Office of Fraud Detection and Market Intelligence, will be retiring at the end of the year. In his place, FINRA will be creating a new role leading the National Cause and Financial Crimes Detection Programs.
