FINRA Is Aligning Its MAP CAIF Grouping Model With Firm Tofu And Feedback -- or so it seems

April 21, 2022
It's nice that FINRA publishes something the self-regulatory-organization calls an Information Noticeafter all, there should be at least a smidgeon of "Information" in any Wall Street regulatory Notice, no? Alas, the smidgeons of information seem to have swum away, as evidenced by the very first paragraph of the April 19th FINRA Information Notice:

This Notice shares key operational changes in FINRA's Membership Application Program (MAP) implemented to improve its effectiveness and efficiency (MAP Transformation), including establishing a centralized application intake function and aligning the program with the firm grouping model developed by FINRA's Member Supervision Department during its recent transformation. 

Is that Klingon or English?


According to the April 19th FINRA Information Notice, the regulator is sharing "key" operational changes in its MAP; and those key changes were "implemented to improve" the "MAP Transformation." In explaining what's so key about the operational changes, FINRA offers these obtuse goals:
  • establishing a centralized application intake function and 
  • aligning the program with the firm grouping model
Okay, what the hell is a "centralized application intake function," and how do you align that with whatever is a "firm grouping model"?

In keeping with FINRA's penchant for acronyms, I'm going to call the centralized application intake function: "CAIF." But hold on to your hats because the April 19th FINRA Information Notice isn't just announcing the MAP Transformation CAIF but also the "aligning" with the "firm grouping model" of the erstwhile MAP (soon to become the MAP Transformation). 

How did the MAP CAIF became un-aligned in the first place? Was FINRA aware that it could align a MAP CAIF just by using a simple tape measure?

FINRA Regulatory Tofu: Firm and Soft Grouping: 

I'm all set to get my hands dirty with grease and crawl under FINRA's chassis in order to align the damaged "firm grouping model," but I had to stop myself. Suddenly, it occurred to me that I don't know what a "grouping model" looks like and, worse, I don't know how to distinguish between the "firm" and "soft" versions. Am I looking for something like a soft Tofu; or is that firm model something like FINRA's Large, Mid-Sized, and Small member firms? 

When FINRA's MAP Transformation vehicle is up on the hydraulic lift undergoing the CAIF alignment, where should we be looking in order to locate the "firm grouping model?" How would I even know if I had found it?  Perhaps we should take heed from the lyrics of "With A Little Help From My Friends":

What do you see when you turn out the light?
I can't tell you, but I know it's mine

MAP Transformation: FINRA Doublespeak and Feedback

One might ask (and if one doesn't, I will) how the hell we got to this point with transforming the MAP via a CAIF realignment with a firm grouping model? As the FINRA Information Release so proudly trumpets:

MAP Transformation 
FINRA has been assessing opportunities to enhance MAP operations and streamline the review process for NMAs, CMAs and other related reviews. The resulting changes incorporate feedback from extensive discussions with member firms and other stakeholders.

Ya got yer MAP. Ya got yer NMAs. Ya got yer CMAs. Ya got yer assessing, enhancing, and streamlining and, of course, other related reviews -- what happened, FINRA run out of acronyms and/or synonyms? 

The says-nothing-means-nothing Information Notice was apparently the result of FINRA's efforts to "incorporate feedback from extensive discussions with member firms and other stakeholders." As  a teenager in the 1960s, I played guitar in a number of rock bands and, as I recall, the first recorded feedback was in the Beatles' 1964 song "I Feel Fine." I hope the good folks at FINRA don't take this the wrong way but, to my ears, the Beatles' version of feedback is a far more catchy tune than your MAP CAIF version:

A Bored FINRA Board?

For Wall Street's overwhelmed compliance staff, you just wasted valuable time reading the April 19th FINRA Information Notice. No, it's not you -- the Notice conveys nothing of importance and revels in informing you that FINRA has been "assessing opportunities" to enhance MAP operations and streamline processes. The Notice is supercilious bureaucratic doublespeak by which FINRA hopes to fool you into believing that there's something serious going on here in terms of regulation. And you were wondering just what FINRA was doing with some 3,000 employees and a multi-million dollar budget?  Recently, former FINRA Governor Stephen Kohn lamented in "Still Fighting the Wall Street Bullies by Stephen Kohn" ( Blog / April 18, 2022)

So, where are we? The small firm community is on its death bed. Regulators are engineering us out of existence through overblown rulebooks and biased regulation. Given that FINRA is a membership organization, one would have hoped for some energetic opposition to the inevitable decline of some of the 90% of FINRA's membership -- look it up, the so-called FINRA Small Firms account for 90%-plus of the total number of member firms. Where is the voice of the FINRA Board of Governors? Sadly, it is a whisper, if anything at all. With few exceptions. no FINRA Governor has the guts to take a stand on behalf of the little guys -- and over the years, it has become infuriating when you recall how many of our elected Governors ran on a platform promising vigorous advocacy for small firms and the implementation of reasonable reforms. Once elected, we got silence from our purported advocates. They sit quietly. Collect their honorarium. Say nothing. Do nothing. All the while, the numbers of small firms dwindle. 

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