At the end of June, 2026, the Financial Industry Regulatory Authority (FINRA) released a report conducted by external experts to identify possible improvements to the current enforcement process. This external review was initiated as part of the “FINRA Forward” program, whose mission is to represent “our commitment to evolving with the rapidly changing securities industry.” As financial advisors and member firms are well aware by now of the significant rule changes and amendments that took effect in the fall of 2023 (as well as other clarifying amendments that were adopted in January and March of 2026), it’s important to recognize that FINRA continues to monitor the impact of these rule changes and explore ways to improve their effectiveness. According to a message released by FINRA’s President and CEO, Robert Cook, FINRA had two outside experts conduct an external review to “identify potential improvements to FINRA’s enforcement function to better serve our self-regulatory mission of protecting investors, safeguarding market integrity, and supporting vibrant capital markets in which everyone can participate with confidence.” The resulting report is a comprehensive review of FINRA’s enforcement program, accompanied by recommendations to improve its function and promote due process, transparency, and fairness.
As a securities professional, it’s worth taking a moment to consider some of the key takeaways from this external review of FINRA’s enforcement program. If you are interested in discussing some of these matters in greater detail or you need help navigating a FINRA arbitration or enforcement issue, consider enlisting the guidance of a highly experienced and trusted securities law attorney who can answer your questions, address your concerns, and provide you with the support you need. Let’s take a look at some of the most notable takeaways from the latest external review of FINRA’s enforcement program and what they may mean for advisors or member firms later on.
Key Recommendations For Improving FINRA’s Enforcement Process
The external reviewers noted that the purpose of the review was to “consider governance, policies, processes, and communications, as well as how FINRA enforcement works with other FINRA departments and federal and state regulators.” When they compiled the report, they included several recommendations to improve due process and transparency in the enforcement process, a few of which are identified and explained in some detail below.
More Visible and Transparent Governance
The report looks at how FINRA’s CEO is currently recused from becoming involved in many enforcement matters and posits that leadership should take a more active role in certain enforcement actions. Additionally, the reviewers recommend that FINRA establish a public Enforcement Manual, published workflow diagrams, improved access to disciplinary materials, abbreviated tracks for technical matters that do not involve harm to investors, and the expanded use of Rapid Remediation, surveillance, and detection.
Clarifying Rule 8210 Requests
The report found that the current version of Rule 8210 is overly broad in scope. Since FINRA Rule 8210 information requests can be quite wide in scope, the reviewers recommend the creation of a formalized review process so that firms can challenge the scope of such requests if they feel that they are inappropriate or unfair. Under this proposal, a neutral decision-maker (i.e., a retired judge or hearing officer) would review these challenges and determine whether they may proceed. It’s worth noting that the reviewers also see the need for safeguards, such as requiring that firms first take their concerns to the Head of Enforcement, cover potential administrative fees, or face sanctions for frivolous challenges.
Giving Firms Time to Engage Earlier in the Process
Another takeaway is that the reviewers recommend changes that would allow respondents to engage sooner in the enforcement process. For instance, a firm would receive written notice of the referral to enforcement, details about the alleged concerns, and the names of the enforcement staff to increase transparency. The reviewers proposed a more structured opportunity for respondents to make their views known much earlier in the enforcement process, such as participating in introductory meetings and taking a more active role in presenting their views of the facts and evidence.
Clearer Limitation Periods
The report strongly recommends the implementation of clearer, more appropriate limitations periods for enforcement matters. Without a statute of limitations, financial advisors and member firms have seen investigations and enforcement actions drag on for months and even years, with many expressing frustration with the lack of progress and meaningful activity. Since FINRA is not subject to statutes of limitations like other government agencies are, the report suggests that FINRA follows federal statute of limitations periods in matters relating to federal securities laws. Other matters could then be subject to a five-year period (with some exceptions, such as continuing violations, manipulation involving customer loss, and tolling).
How These Recommendations Could Affect Member Firms
By commissioning and publishing this external review, FINRA is signaling its commitment to improving its enforcement program to support its mission. So far, it appears that the majority of the recommendations focus on making the process more transparent and fair to member firms by giving them more agency in the FINRA enforcement action process. FINRA has already stated that it plans to publish an Enforcement Manual and share more regular updates about its enforcement process to align with some of these recommendations. As a securities professional, it’s important to recognize that you do not have to face these matters on your own. When you enlist the guidance of an experienced and knowledgeable FINRA arbitration attorney, you can trust that your best interests will be protected as much as possible as you move through every step of the upcoming process.
Get Started With a Dedicated Legal Advocate Today
As a financial advisor or member firm, it can be challenging to keep up with the latest regulatory changes and developments. That’s why Judex Law is ready to answer your questions and guide you through the FINRA arbitration or enforcement process with greater understanding and clarity. If you are looking for trusted and effective legal counsel as you navigate a FINRA-related matter, please reach out to our Broomfield, Colorado office today by calling (303) 523-4022 to get started with a highly experienced and friendly securities law attorney.