Wall Street watchdog to boost transparency about using ‘cooperation’ for penalty reductions
12 Jul 2019

Wall Street’s industry-funded watchdog on Thursday said it plans to be more transparent about its process for determining when a securities brokerage qualifies for a reduced penalty in exchange for so-called “extraordinary cooperation.”

The Financial Industry Regulatory Authority (FINRA) said settlements it reaches with brokerages for regulatory violations will include more explanation about why FINRA deemed the cooperation to be “extraordinary” and what type of credit the regulator applied to reduce the sanction.

The change, published in a regulatory notice, is the latest effort by a U.S. financial regulator to highlight cooperation programs, which they say are central to their enforcement efforts.

FINRA’s updated guidance comes as other U.S. financial regulators, including the Commodities Futures Trading Commission (CFTC), are ramping up their cooperation programs to enhance their enforcement efforts.

By offering reduced penalties to firms and individuals who self-report lapses and cooperate in probes, CFTC enforcement chief James McDonald has spurred executives to lead his team to other misconduct and offenders.

By Suzanne Barlyn, Reuters, 11 July 2019

Read more at Reuters

Photo: Ajay Suresh [CC BY 2.0], via Wikimedia Commons

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