Exam Preparation

FINRA Exam Preparation

Understand the FINRA examination process, know what to expect during cycle exams, cause exams, and sweep exams, and prepare your firm for a successful regulatory review.

Types of FINRA Examinations

FINRA conducts three primary types of examinations, each with different triggers, scopes, and implications for your firm.

Cycle Exam

Routine Examination

Scheduled, periodic examinations conducted as part of FINRA's regular oversight cycle. Frequency depends on firm size, business model, and risk profile. Most firms are examined every 1 to 4 years.

  • Scheduled based on risk-based prioritization
  • Comprehensive review of firm operations
  • Covers multiple compliance areas
  • Typical duration: 2 to 6 weeks

Cause Exam

Triggered Examination

Initiated by a specific event such as a customer complaint, regulatory tip, unusual trading activity, or other red flag. Focused on the area of concern that triggered the examination.

  • Triggered by complaints, tips, or surveillance
  • Narrowly focused on specific concerns
  • Can expand in scope if issues are found
  • No advance notice in many cases

Sweep Exam

Industry-Wide Inquiry

A targeted examination of a specific compliance topic conducted simultaneously across multiple firms. Designed to assess industry-wide practices and identify systemic concerns.

  • Targets a single topic across many firms
  • Often tied to annual exam priorities
  • Results may inform new rulemaking
  • Recent sweeps: Reg BI, crypto, cybersecurity

Examination Timeline

What to expect at each stage of a typical FINRA examination, from notification through findings.

1

Notification

2-4 weeks before

FINRA sends an examination notification letter identifying the scope, requested documents, and tentative dates for the on-site visit.

2

Document Request

1-2 weeks

Firm gathers and submits requested records including policies, procedures, account documentation, trade blotters, and communications samples.

3

On-Site Visit

1-2 weeks

Examiners conduct interviews with key personnel, review records, test transactions, and evaluate supervisory controls at your office.

4

Exit Interview

1 day

Lead examiner discusses preliminary findings, areas of concern, and potential deficiencies with firm leadership and compliance staff.

5

Exam Findings Letter

30-60 days after

FINRA issues a formal findings letter documenting deficiencies, required corrective actions, and deadlines for remediation responses.

Key Examination Focus Areas

The compliance topics that FINRA examiners most frequently evaluate during broker-dealer examinations.

Advertising Compliance (Rule 2210)

Review of retail communications, social media posts, and marketing materials for fair balance, required disclosures, and principal approval.

Suitability / Reg BI

Assessment of recommendation practices, customer profiling, conflict disclosures, and compliance with Regulation Best Interest obligations.

Supervision

Evaluation of written supervisory procedures, supervisory staffing, branch office oversight, and supervisory review systems.

Anti-Money Laundering

Testing of AML program components including customer identification, suspicious activity reporting, independent testing, and OFAC screening.

Cybersecurity

Assessment of cybersecurity policies, incident response plans, vendor management, data protection controls, and customer notification procedures.

Best Execution

Review of order routing practices, execution quality analysis, regular and rigorous review of execution, and payment for order flow disclosures.

2025 FINRA Examination Priorities

FINRA publishes annual examination priorities to help firms anticipate the areas examiners will focus on. Use these priorities to conduct proactive self-assessments and strengthen your compliance program.

  • Regulation Best Interest (Reg BI) implementation and compliance
  • Crypto asset communications and suitability practices
  • Off-channel communications and recordkeeping
  • Cybersecurity incident preparedness and response
  • Anti-money laundering program effectiveness
  • Senior investor protections and exploitation prevention
  • Market manipulation and insider trading surveillance
  • Branch office supervision in remote and hybrid work settings
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