(Reuters) Wall Street brokerages that hire stockbrokers who have a track record of misconduct should expect to show examiners how they will curb future wrongdoing, the industry's watchdog said on Thursday in an overview of issues it will review in 2014.
The Financial Industry Regulatory Authority (FINRA) said it will review the process that firms use to research problem brokers before hiring them. The industry-funded watchdog also wants to know whether firms take extra measures to supervise the brokers to prevent future misdeeds, such as sales abuses involving client accounts.
"You have to know your customer and the product you're selling. But firms also really have to know who they're hiring," Susan Axelrod, FINRA's head of regulatory operations, told Reuters.
FINRA, which routinely examines the industry's nearly 4,200 securities firms to gauge their compliance with securities industry rules, published its annual list of "examination priorities" on Thursday. The regulator's beefed-up interest in problem brokers follows its efforts last year to rein in brokers with troublesome professional histories, including numerous customer complaints or sanctions such as fines and suspensions.
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