What does FINRA do when it comes to background checks?
FINRA is the successor to the National Association of Securities Dealers, Inc. and the member regulation, enforcement, and arbitration operations of the New York Stock Exchange. They oversee background checks for brokers, which goes a long way towards keeping the financial services industry safe and trustworthy.
At the end of 2017, FINRA fined J.P. Morgan Securities for incomplete background checks on 95 percent of their non-registered associate employees from January 2009 through May 2017. The failures to conduct these investigations represented a massive violation of regulatory requirements. Though these failures were self-reported, they are concerning, because failures in a firm’s screening protocol could showcase either deficient policies and procedures, communications failures in alerting compliance and human resources staff of the missing information, or a purposeful lack of regard for the rules of the industry.
FINRA is charged with monitoring background investigations of brokers and will be doing more to achieve this end in the future. In fact, they will begin conducting these checks themselves in many instances, saving firms time and money and lessening the likelihood of future problems.