FINRA has made brokerage firm “culture” one of its top priorities for 2016. FINRA refers to “culture” as how management sets the bar for the firm and how culture effects their brokers interaction with clients and their business. According to FINRA, firm culture has a profound influence on how a broker-dealer conducts its business, including how it manages conflicts of interest. This is a new area FINRA is trying to investigate.
One way FINRA is looking into culture is to see if there are any forms of payments and commissions that could affect an employees behavior. FINRA is reaching out to the industry by seeing where firms stand versus enforcing strict “culture” rules on how a brokerage firm must act. Recently, FINRA sent more than a dozen firms 8 questions regarding their firms “culture.” The questions were the following:
” 1. A summary of the key policies and processes by which the firm establishes cultural values. In the summary, include whether this is a board-level function at your broker-dealer or at the corporate parent of the firm. If it is a board-level function, describe the board’s involvement. Also, provide a description of any steps you have initiated or completed in the past 24 months to promote, strengthen or change your firm’s culture.