Susan Schroeder, FINRA’s Head of Enforcement, Steps Down
FINRA, the Financial Industry Regulatory Authority, announced on September 19, 2019 that Susan Schroeder, executive vice president and head of FINRA Enforcement, will leave the self-regulatory organization by the end of the year. Susan Schroeder joined FINRA in 2011, beginning as Senior Vice President and Deputy Chief of Enforcement. Jessica Hopper, the Deputy Head of Enforcement, will become the Acting Head of Enforcement.
“Enforcement removes bad actors from the market, returns money to wronged investors, and prevents future harm—critical functions so that investors can rely on a safe market to fund their educations, retirements, and lives. I am so grateful to have been a part of that important work. … I am proud of the innovative solutions FINRA has implemented as part of its commitment to constantly enhancing regulation,” says Schroeder.
Since stepping into her role in July 2017, Schroeder has led the consolidation of FINRA’s two enforcement arms—one for fraud found through market surveillance and one for other regulatory decisions. FINRA Enforcement differs from FINRA Dispute Resolution, which includes the arbitration forum where customers sue brokers who have committed alleged fraud. FINRA Enforcement investigates and sanctions brokers who engage in manipulative trading or other forms of broker fraud. The new enforcement Division was borne out of FINRA360, a “comprehensive self-evaluation and organizational improvement initiative” launched by FINRA’s CEO, Robert W. Cook, in 2017—ten years after FINRA was formed from the consolidation of the NASD and NYSE Enforcement.
According to the FINRA360 Progress Report from April 2018, FINRA launched a program by which registered representatives who are also Certified Financial Planners (CFPs) could receive continuing education credits for completing FINRA’s e-learning initiatives, covering topics such as anti-money laundering compliance. FINRA also launched a Small Firm Helpline to help small firms with their compliance efforts.
While admirable, this self-review doesn’t go far enough in terms of investor protections. FINRA can—and should—do more to safeguard investors. While FINRA operates the largest securities dispute resolution forum in the U.S., their governance structure is concerning. Representatives from major brokerage firms sit on the Board of Trustees, creating a conflict of interest that ultimately undermines FINRA’s mission of consumer protection. With the departure of Susan Schroeder and the appointment of Jessica Hopper, hopefully FINRA Enforcement will step up to the plate and take increased action to ensure that brokers don’t get away with defrauding investors.