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Finra Guidance Sees Compliance Execs as More Advisory Than Supervisors







The Financial Industry Regulatory Authority has said it’ll only take actions against chief compliance officers who don’t carry out specific supervisory responsibilities designated by the firm — not in matters where they’re just playing an advisory role, The Wall Street Journal reported Thursday (March 17).

Finra is the self-regulatory arm for Wall Street. On Thursday, it said it usually considers the role of compliance chief an advisory role, not a supervising one. The responsibility for supervision under the rules lie with the company’s senior business management, rather than compliance officers.

The report noted that chief compliance officers were charged in 28 cases out of about 440 Finra disciplinary actions between 2018 and 2021 which had to do with supervisory failures.

In 18 of the 28 cases, the compliance chief was also doubling as CEO or president of the firm, which constitute supervisory responsibilities.

The Finra notice comes as the New York City Bar Association and the National Society of Compliance Professionals have also proposed frameworks to define better the way compliance chiefs are liable for things.

“Chief compliance officers play an important role in facilitating compliance by promoting strong practices that protect investors and market integrity,” Jessica Hopper, head of enforcement at Finra, said in a statement. “That does not automatically make them supervisors, subject to Finra’s supervisory requirements.”

PYMNTS wrote that last year, Robinhood CEO Vlad Tenev came under investigation when it was revealed that Tenev wasn’t licensed by Finra.

See also: Robinhood Under Probe For CEO’s FINRA Non-Registration Status

At the time, Robinhood filed a reply saying it had reviewed Finra’s request and that it had also involved the non-registration status of co-founder Baiju Bhatt. The probe also intended to look into Robinhood employees’ stock trades in the wake of the stockbroker instituting restrictions in January on various “meme stocks.”

The probe came after Sen. Elizabeth Warren had said previously that Tenev should be licensed and trained on market rules and risks.




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