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The Financial Industry Regulatory Authority, Inc. (FINRA) posts the disciplinary actions it took to an online database. It also publishes a monthly summary of these actions, which is a worthwhile read for those in the industry—if only for insight into FINRA’s current priorities. Below, I offer my thoughts on FINRA’s July 2026 edition.


Check the Box and Miss the Point

I like checklists.  I don’t go grocery shopping without one.

But there can be a problem if completing the checklist becomes the objective rather than accomplishing the thing the checklist was designed to accomplish.  That is not too far removed from the point I made in June’s Ask One More Question: completing a process is not necessarily the same thing as doing the job.

A couple of matters in FINRA’s July report brought that distinction to mind.

  • One firm conducted bi-monthly reviews of customer account statements. Check. But the review focused primarily on whether the numbers were accurate and did not determine whether customer holdings were properly categorized. They were not. In fact, certain securities had been categorized in a way that could suggest the product had a government guarantee that did not exist.
  • Variable annuities supplied another example. One firm used a standardized exchange form, but the form did not collect all of the information supervisors needed to evaluate the transactions. That included surrender charges, certain fees, benefits that would be lost in an exchange and whether the customer had completed another exchange during the preceding 36 months. More than 50 exchanges were approved without all of the information required to be considered.

Law and Order: Check the box, miss the point. A checklist on a clipboard lays upon a work desk surrounded by books, and other comforting items.


The Lesson

Checklists are popular for a reason. They force us to slow down and confirm that important steps have not been missed. Compliance programs need them too.

However, a completed form can provide a false sense of comfort if the form does not collect the right information. A surveillance report is not particularly helpful if no one confirms that the underlying alerts are functioning. July’s report suggests a few questions worth adding to the next compliance review:

  • Does this control still address the risk it was designed to address?
  • If this control disappeared tomorrow, what would happen?
  • How would we know if this report, alert or surveillance tool stopped working?
  • Are supervisors considering the information we collect, or merely confirming that it was collected?

Because broker-dealers, registered investment advisers and their associates want to spend their time serving their clients.

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