Why FINRA Enforcement Around CAT CAIS Is Getting More Aggressive - almaosborne24/BLOGS GitHub Wiki

As the regulatory landscape continues to evolve, broker-dealers and market participants are feeling increased pressure from the Financial Industry Regulatory Authority (FINRA). One area drawing particular scrutiny is compliance with the Consolidated Audit Trail (CAT) and Customer Account Information System (CAIS) reporting obligations. Over the past year, FINRA has stepped up its enforcement efforts, sending a clear message: non-compliance will not be tolerated.

In this blog, we’ll explore why FINRA is becoming more aggressive with CAT/CAIS enforcement, what this means for your firm, and how a robust system like RSMS (Regulatory Surveillance and Management System) can help mitigate risk.

  1. The Maturation of CAT and CAIS Reporting Frameworks When CAT and CAIS were first introduced, the focus was primarily on implementation. FINRA adopted a collaborative approach with firms to support onboarding and address operational challenges. But that phase is over.

Key Milestone: With CAT now in full production mode and CAIS rapidly evolving (with deadlines for full account and relationship reporting passed), FINRA expects firms to be fully compliant.

  1. High Stakes: Data Quality and Market Transparency CAT and CAIS were designed to increase market transparency, strengthen investor protections, and enable faster investigations of manipulative behavior. For these systems to work, the data must be:

Timely Complete Accurate FINRA has observed that many firms still struggle with these standards, resulting in frequent late submissions, erroneous data, and inconsistent linkage between events and account holder information. These issues compromise the integrity of the entire system — and FINRA is responding accordingly.

  1. Enforcement Actions and Formal Reviews Are Increasing Recent trends show

Increased warning letters for firms with repeated CAT/CAIS errors Heightened audits and surveillance sweeps focusing on data governance and reporting procedures Referral of serious violations to enforcement — including monetary fines and formal disciplinary action The shift is clear: FINRA now treats CAT/CAIS violations as core compliance failures, not operational oversights.

  1. Why FINRA Is Cracking Down Now Several factors are driving this:

Pressure from the SEC: As CAT/CAIS are SEC-mandated programs, FINRA must demonstrate oversight effectiveness. Mature reporting infrastructure: After years of rollout and updates, systems like CAT Phase 2e and CAIS Phase 2 are deemed production-ready. Reputational concerns: High-profile trading incidents and investor fraud cases have placed greater public focus on market surveillance failures. 5. What This Means for Broker-Dealers and Firms Firms can no longer afford to treat CAT/CAIS as just another reporting task. They must:

Validate data quality continuously Ensure accurate and timely submissions Automate exception tracking and correction workflows Implement robust audit and oversight protocols 6. How RSMS Helps You Stay Ahead At Capital Market Solutions, we’ve designed the Regulatory Surveillance and Management System (RSMS) to be a complete compliance lifecycle platform, enabling:

Real-time monitoring of CAT and CAIS submissions Automated validation against FINRA rules Exception management workflows with audit-ready resolution Seamless integration with CAIS-Connect for cleaner data mapping

With RSMS, your team can move from reactive firefighting to proactive compliance management — reducing regulatory exposure while boosting internal confidence.

Conclusion FINRA’s aggressive stance on CAT and CAIS enforcement signals a new era of regulatory accountability. As the margin for error shrinks, firms must invest in the right tools and processes to stay compliant — or risk costly penalties.

Ready to future-proof your compliance program? Contact Capital Market Solutions to schedule a demo of RSMS today.