meta_id 3205539

In May 2026, the Financial Industry Regulatory Authority (FINRA) announced it is conducting a review of firm practices related to supervision of concentrations in non-principal protected "worst-of" structured notes, a higher-risk structured product. FINRA is examining how firms ensure compliance with Regulation Best Interest (Reg BI)—including Reg BI's care and conflict of interest obligations—and with FINRA rules when registered representatives recommend these products to customers. "Worst-of" structured notes are principal-at-risk products that may result in reduced or ceased interest payments and reduced return of principal at maturity, based on the worst-performing asset in a group of two or more reference assets. FINRA's examination covers the period from January 1, 2022, through December 31, 2025. The review focuses on several key areas: written supervisory procedures (WSPs) related to structured notes and complex products; how firms categorised structured notes for supervision purposes, including classifications based on product risk; restrictions or limitations placed on recommendations, including concentration limitations; supervisory alerts and exceptions in place for structured notes; structured product training provided to representatives; compensation structures for sales of structured notes; identification and mitigation of product-related conflicts of interest; and customer disclosures concerning structured notes and compensation information. Firms subject to this examination must provide detailed responses explaining any variations in practices across the relevant period. This review reflects FINRA's focus on ensuring that firms adequately supervise high-risk product recommendations and maintain compliance with Reg BI's requirements to act in customers' best interests while managing conflicts of interest. The examination addresses potential gaps in supervision and disclosure practices related to concentrated positions in complex structured products.