Stacked white books on rules and regulations

U.S. self-regulatory organization the Financial Industry Regulatory Authority (FINRA) issued new guidance on Thursday that aims to demystify how it provides credit for cooperation under its enforcement regime.

The SRO first issued guidance in this area back in 2008, but says that rule changes since then may have clouded how it provides credit to firms and reps for providing “extraordinary” cooperation with its enforcement efforts, as opposed to the routine cooperation, which is required under its rules.

“In response to comments from member firms requesting further transparency, FINRA is issuing this notice to provide additional information about what firms and individuals can do to earn credit for extraordinary cooperation, and what kinds of credit are available,” Susan Schroeder, executive vice president of FINRA’s department of enforcement, said in a statement.

The credit it provides for exceptional cooperation can range from substantially reduced sanctions, to the SRO deciding not to pursue enforcement action at all in cases where a problem has been fully remediated.

The factors that FINRA considers in determining the amount of credit includes the timeliness and quality of corrective measures, and other cooperative steps aimed at broadly and quickly remediating harm.

“We grant credit for extraordinary cooperation to incentivize firms and associated persons to voluntarily and proactively assist FINRA,” Schroeder said.

“Respondents who go beyond their regulatory obligations and take extraordinary steps to quickly identify and remediate misconduct materially aid FINRA in meeting its objectives of investor protection and market integrity,” she added.