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FINRA Launches Sweep Exam on Broker-Dealer Cross-Selling Programs

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October 28, 2016

Client Alert
The Financial Industry Regulatory Authority (“FINRA”) announced that it is conducting a sweep examination on broker-dealer firms to look into incentives and business practices that may encourage employees to engage in inappropriate cross-selling activities. In particular, FINRA is looking at how broker-dealer firms promote bank products of their affiliates or parent company to broker-dealer retail customers, add features like checking accounts, securities-based loans and credit cards to broker-dealer retail customer accounts and open additional broker-dealer retail accounts for customers. Like many regulatory organizations, FINRA is focusing on these cross‑selling activities in the wake of the issues associated with certain bank cross-selling programs.

FINRA is requesting production of information relating to the period from January 1, 2011 through September 30, 2016. The requests focus on information relating to:

A summary of the information requested by FINRA in certain sweep examination letters is available here.

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