Why FINRA Is Intensifying CAT and CAIS Enforcement - And What Your Firm Must Do About It

As the regulatory environment sharpens its focus, broker-dealers and market participants are facing mounting pressure from the Financial Industry Regulatory Authority (FINRA). A key area of scrutiny? Compliance with Consolidated Audit Trail (CAT) and Customer Account Information System (CAIS) reporting obligations.

Over the past year, FINRA has ramped up enforcement efforts-signaling a clear shift from education to accountability. In this blog, we explore the drivers behind this heightened oversight, the risks non-compliance poses to your firm, and how RSMS (Regulatory Surveillance and Management System) can help you stay ahead.

Know more about CAIS : https://capmarketsolutions.com/cais/

1. From Implementation to Enforcement: CAT and CAIS Have Matured
In the early stages, CAT and CAIS programs focused on onboarding, with FINRA taking a supportive approach. However, that grace period has ended.

Key milestone:
CAT is now fully operational, and CAIS is moving quickly toward complete implementation, with major deadlines for account and relationship data already passed. FINRA now expects firms to be fully compliant-not catching up.

2. Data Quality Is Non-Negotiable
CAT and CAIS are core to market transparency and investor protection. For them to function effectively, the data submitted must be:

Timely

Accurate

Complete

Unfortunately, many firms continue to miss the mark, submitting late, erroneous, or incomplete data-disrupting the integrity of the entire surveillance system.

3. Enforcement Activity Is on the Rise
The numbers and trends don't lie. Firms are increasingly facing:

Warning letters for repeated errors

Surveillance sweeps targeting data governance practices

Formal enforcement actions with financial penalties and disciplinary measures

This isn't just operational housekeeping anymore-FINRA now treats CAT and CAIS violations as critical compliance failures.

4. Why Now? The Pressure Behind the Crackdown
Several forces are driving FINRA's more aggressive posture:

SEC Expectations: As CAT and CAIS are SEC-mandated, FINRA is under pressure to show enforcement rigor.

Mature Systems: CAT Phase 2e and CAIS Phase 2 are considered production-ready.

Reputational Risk: Market manipulation and investor fraud cases have highlighted weaknesses in surveillance, prompting tougher oversight.

Know more about CAT : https://capmarketsolutions.com/cat/

5. What It Means for Broker-Dealers
Firms must move beyond surface-level reporting practices. To avoid regulatory fallout, they must:

Validate data quality on an ongoing basis

Automate submissions and exception workflows

Create robust audit trails and oversight systems

Treat CAT/CAIS as a core part of compliance, not an afterthought

6. The RSMS Advantage: Proactive Compliance Starts Here
At Capital Market Solutions, we've built RSMS to help firms move from reactive compliance to proactive control. RSMS offers:

Live monitoring of CAT and CAIS activity

Automated rule validation aligned with FINRA requirements

Exception management with audit-ready resolution tracking

Integrated CAIS-Connect compatibility for smoother data reporting

With RSMS, your team can reduce regulatory risk, save time, and gain peace of mind.

Conclusion: Compliance Is No Longer Optional
FINRA's aggressive enforcement of CAT and CAIS marks a new era of regulatory accountability. As the margin for error disappears, firms must invest in intelligent, end-to-end solutions like RSMS-or face steep consequences.

Ready to take control of your CAT and CAIS compliance?
Contact Capital Market Solutions today to schedule a personalized RSMS demo.
https://capmarketsolutions.com/

Contact:
Capital Market Solutions
Email: sales@capmarketsolutions.com
Office: New York, NY
Visit: www.capmarketsolutions.com

Capital Market Solutions (CMS) is a leader in regulatory, compliance, and reporting solutions for investment banks, broker-dealers, hedge funds, and more. For years, CMS has helped firms by providing reliable and flexible tools to meet regulatory demands. The cloud-based RSMS CAT modules are among CMS's most trusted products, delivering secure, accurate, and efficient compliance processes. By combining smart technology with expert regulatory knowledge, CMS continues to simplify and enhance compliance for financial firms around the world.

This release was published on openPR.