FINRA recently named Bill St. Louis as its new Executive Vice President and Head of Enforcement. For compliance officers, this leadership change could merit attention. What enforcement priorities will St. Louis establish in his new role, and what does his vision mean for firms’ compliance obligations? Here are three key takeaways from St. Louis’ inaugural FINRA Unscripted podcast interview:

Regulation Best Interest (Reg BI) remains a top focus.

St. Louis stressed that Reg BI cases will continue to be a priority in 2024. He flagged cases addressing:

  • the duty of care,
  • excessive trading,
  • overconcentrated products, and
  • failures to disclose conflicts of interest.

Compliance teams need to continually evaluate whether their supervision, training, and disclosure procedures fully align with Reg BI’s requirements.

Communication and cooperation with FINRA are emphasized.

St. Louis committed to improving communication during investigations, including more regular check-ins so lengthy gaps don’t occur. He also highlighted avoiding regulatory duplication and encouraged firms to speak up if they encounter overlapping examinations. This signals an openness to collaboration that compliance officers should take advantage of.

Enforcement aims to be prudent, not penal.

While serious violations warrant formal actions, St. Louis noted most investigations don’t result in disciplinary proceedings. Cooperation, remediation, and voluntary restitution can avoiding fines even with Settlement Agreements. Compliance teams should thus approach Enforcement inquiries as opportunities to demonstrate their firm’s compliance rigor, not to automatically assume the worst.

St. Louis brings nearly 25 years of FINRA experience to his new role. Compliance officers would be wise to closely follow his leadership and priorities. A cooperative, transparent approach can help allay enforcement concerns and foster improved relations with regulators.

The full podcast with St. Louis provides further insights for compliance professionals. As FINRA’s enforcement agenda evolves in 2024 and beyond, sustained engagement with St. Louis’ vision will enable firms to refine their supervisory controls and demonstrate their commitment to compliance.