What the Research Tells Us: The SEC, CFTC, FINRA

It was a record year at the SEC, with 868 enforcement cases, up from 807 in 2015 and 755 the year before that: a reflection of former chair Mary Jo White’s ‘broken windows’ policy, pursuing even minor infractions. Nevertheless, the Trump Presidency’s focus on national security should mean that AML continues to be a priority, and SEC’s examination priorities suggests a number of other areas will see increased activity.

Top priorities this year, meanwhile, are likely to be driven by one of three factors: FINRA’s own key areas of focus, which include senior investors, high-risk and recidivist brokers, and market manipulation; regulatory change in areas such as credit risk, with changes to margin requirements for cover under FINRA Rule 4210; and the rise of digital. Like the SEC, FINRA remains concerned by the cyber security risk to firms, and is also to review their compliance with supervisory and record-retention obligations with respect to social media and other electronic communications.

The Global Enforcement Review (GER) provides analysis and commentary on global enforcement trends in the financial services industry. To compile this report, we studied published data released by the UK Financial Conduct Authority (FCA), the U.S. Securities and Exchange Commission (SEC), the U.S. Commodity Futures Trading Commission (CFTC), the U.S. Financial Industry Regulatory Authority (FINRA), and the Securities and Futures Commission (SFC) of Hong Kong in 2016 and recent years. We have also explored the enforcement trends in various offshore jurisdictions.