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Earlier this year, the Financial Industry Regulatory Authority (FINRA) made some noise about its desire to take charge of oversight and enforcement of investment advisers, a financial sector currently under the watchful eye of the Securities and Exchange Commission. The SEC must not have thought much of that proposal, because on Thursday the agency accused FINRA of altering documents and ordered the organization “to hire an independent consultant and undertake other remedial measures to improve its policies, procedures, and training for producing documents during SEC inspections.” According to a statement from the SEC, “certain documents requested by the SEC’s Chicago Regional Office during an inspection were altered just hours before FINRA’s Kansas City District Office provided them.” The charge focuses on three sets of minutes from August 2008 FINRA staff meetings in Kansas City, which are part of a larger set of documents the self-regulatory organization is required by law to submit to the SEC. The SEC went on to note that this was not the first instance of a similar issue with FINRA documents: “According to the SEC’s order, the production of the altered documents by the Kansas City District Office was the third instance during an eight-year period in which an employee of FINRA or its predecessor (National Association of Securities Dealers) provided altered or misleading documents to the SEC.” The statement by the SEC says that FINRA is neither “admitting or denying the findings,” but has agreed to hire an independent consultant to review its “policies and procedures and training relating to document integrity” and make necessary adjustments to avoid future infractions. The SEC’s full order to FINRA is available here [PDF]. See also: “Is FINRA Set to Be the Big New Regulator on the Block?,” CorpCounsel, September 2011.

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