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Do You Know the FINRA Rules, and Are You Prepared for a FINRA Audit?

Although risk-taking is part of the game in the world of financial services, when it comes to safeguarding your brokerage’s vital and exploitable data, the tolerance for risk should be zero. The reality is you can’t take chances with downtime, compliance issues, and data breaches in today’s computer networking (and heavily IT-regulated) world.

This is why you need an experienced Managed Services Provider (MSP) like SSE Network Services who specializes in IT financial security to keep you safe from a FINRA audit failure.

Download our complete financial IT security report here


As you may or may not already know, the Financial Industry Regulatory Authority, Inc. (FINRA) strictly regulates brokerage firms and exchange markets. FINRA’s primary (or main stated) goal is to protect investors by maintaining the fairness of U.S. capital markets.

FINRA now uses a technology-driven model called CARDS (the Comprehensive Automated Risk Data System) to compile trading data from approximately 4,000 brokerages that serve over 110 million investor accounts. CARDS automates and standardizes the collection of data that FINRA once accumulated manually. They use big-data analytics to assess, in real time, where fraud occurs and uses tools to take corrective action immediately.

Why you should be concerned.

Critics believe that this automated system has caused a hyper-regulated environment where the smallest discrepancy triggers a FINRA audit. This is a reality, and further reason your organization should always be prepared, keeping your data protected on multiple levels.

FINRA fines brokerage firms and their representatives for violating rules and regulations. Just one data breach could result in hefty fines from FINRA. 

FINRA rules require that:

  • All sensitive data be encrypted.
  • Networks are actively managed and monitored to detect and identify intrusions.
  • Firewalls and application services are configured to minimize direct connections to the Internet (including databases).

Should you experience a data breach or fail a FINRA audit, you could be hit with hefty fines.

The core focus of IT services for financial brokerages should be compliance with successful audits to mitigate data breaches. Almost every IT decision you make should be based on the possibility you may be audited.

And, with all the potential investors out there who are now performing a FINRA broker check to see who’s safe and who isn’t, it’s self-defeating not to have the proper level of IT security!

Your Cybersecurity level is a growing focus of FINRA audits and their decision-making factors.

Last year, FINRA fined several Wells Fargo & Co businesses, RBC Capital Markets, LPL Financial, and others, to the tune of $14.4 million.  They found that these financial organizations failed to secure hundreds of millions of electronic documents in a “write once, read many” format, which would have made it impossible to alter or destroy records after they were written.

But, not to worry. As your MSP and Partner in IT, SSE Network Services will:

  • Help you navigate, resolve and avoid FINRA compliance issues that plague financial brokerages.
  • Identify and neutralize any vulnerabilities in your security posture by managing security patches, service packs, anti-virus protocols and data backups.
  • Manage your projects, cyber security and compliance to ensure that your systems perform as expected for business and regulatory purposes.

Download our complete broker IT security report here

We provide iron-clad financial services IT support for St. Louis brokerage houses.

To read more about what the implications are for failing to be in FINRA compliance, and what SSE Network Services can do for your brokerage firm, click on the previous link. For more questions and to secure our services, ensuring you remain FINRA audit-ready, call us at (314) 439-4700 or email us at sales@sseinc.com to get started.

Written by SSE Networks on April 29th, 2017.

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    St. Louis, MO 63146

  • (314) 439 - _ 4700

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