FINRA ordered to improve internal processes by SEC

31 October 2011

The Securities and Exchange Commission (SEC) has ordered Financial Industry Regulatory Authority (FINRA) to improve its internal processes surrounding document production.

According to the regulator, paperwork provided by FINRA’s Kansas City District office to the SEC’s regional office in Chicago was found to have been altered hours before they were handed over.

The alteration of the documents, which were three records of staff meeting minutes, was found to have been the third time in eight years that FINRA or a representative from the body had committed such an act.

Gerald Hodgkins, associate director of the SEC’s Division of Enforcement, said that the law stipulates how FINRA needs to provide documents which are both “complete and accurate”.

“Athough FINRA has previously taken steps to improve compliance, those enhancements did not go far enough to prevent the document production failure that occurred in its Kansas City District Office,” he said.

FINRA did not admit or deny the findings of the SEC’s order but consented to order an independent consultation to review its policies relating to the security of documents.

By Jim Ottewill

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