Law and Order – June 2026: Ask One More Question

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 June 2026 edition.

Ask One More Question

I recently came across a Carl Sagan quote that stuck with me:

“Keeping an open mind is a virtue but … not so open that your brains fall out.” -Carl Sagan

Sagan argued that we should be willing to ask questions, test assumptions, and challenge our own conclusions. That struck me as a pretty good description of compliance. Curiosity is often rewarded. Blind acceptance rarely is.

Several of June’s disciplinary actions involved firms that had supervisory systems, written procedures, surveillance reports, and testing programs. The right pieces were in place. The recurring issue was not the absence of controls, but the execution of those controls.

One matter involved a representative whose recommendations generated supervisory alerts over an extended period. The alerts were reviewed, but meaningful follow-up did not occur until much later. Another matter involved a firm’s annual AML testing. While the testing itself occurred each year, it relied on customer risk assessments that had not been meaningfully updated for several years, limiting the effectiveness of the review. Elsewhere, communications containing misleading performance claims passed through supervisory review before reaching the public. In another case, supervisory responsibilities were assigned in a manner that undermined the independence those reviews were intended to provide.

Did anyone stop to question the results?

The Lesson

One of the benefits of experience is that we become better at recognizing patterns. We understand how our firm’s supervisory processes operate. We develop confidence in the systems we have built. That confidence is valuable because it allows us to focus our attention where it is most needed.

It should not, however, replace curiosity. A surveillance report should not simply be reviewed; it should be questioned. A supervisory process should not be defended simply because it has always existed. It should continue to earn its place.

As Sagan observed, “Extraordinary claims require extraordinary evidence.”

In compliance, I think a similar principle applies. Ordinary processes deserve ordinary questions. Those questions are usually enough to uncover the issues worth discussing. Because broker-dealers, registered investment advisers and their associates want to spend their time serving their clients.

Ask One More Question

The Lesson

Read More: