2016 Broker-Dealer Training Considerations

Annual broker-dealer training should be derived from relevant regulatory and/or industry focus areas. It is important to consider the current “hot topics” and implement appropriate training regarding the areas that would best mitigate risk when performing needs analysis and developing an annual broker-dealer training plan.

We have utilized appropriate industry publications and summarized the applicable topics that were addressed. You can click the links below for more information on the referenced subject matter. Firms are reminded that they should not rely solely on these topics below. The ultimate goal is for the Firm to reduce its regulatory and litigation risk and to have considered all relevant factors. The first section is a summary of the topics to be considered for training and the last section includes available training resources.

BROKER-DEALER TRAINING CONSIDERATIONS

The following are a list of the pertinent industry publications:

FINRA’s 2016 Regulatory and Examination Priorities Letter This letter is issued annually by FINRA and highlights new and existing areas of significance to FINRA’s examination program that may be useful when developing educational programs within your Firm.  To see the full letter, click here. Topics covered in this update include:

  • Culture, Conflicts of Interest and Ethics
  • Supervision, Risk Management and Controls
    • Management of Conflicts of Interest, Technology, Outsourcing, and AML Controls
  • Liquidity
    • Firm Funding
  • Sales Practice
    • Suitability and Concentration, Seniors and Vulnerable Investors, Sales Charge Discounts and Waivers, 529 College Savings Plans, Private Placements, the JOBS Act and Public Offerings, and Outside Business Activities
  • Financial and Operational Controls
    • Market-Maker Net Capital Exemptions, Exchange-Traded Funds (ETFs), Fixed Income Prime Brokerage, Internal Audit, Client Onboarding, and Transmittal of Customer Funds
  • Market Integrity
    • Vendor Display Rule, Market Access, Fixed Income, Regulation SHO, Cross-Market and Cross-Product Manipulation, and Audit Trail Integrity

SEC’s Office of Compliance Inspections and Examinations – Examination Priorities for 2016This letter is issued annually by the SEC and highlights new and existing areas of significance to the SEC’s examination program that may be useful when developing educational programs within your Firm. To see the full letter, click here. Topics covered in this update include:

  • Retail Investors
    • Risks to Retail investors, Exchange-Traded Funds (ETFs) and ETF Trading Practices, Variable Annuity Recommendations and Disclosure, Fee Selection and Reverse Churning, and Potential Conflicts and Risks Involving Advisers to Public Pension Funds
  • Market-Wide Risks
    • Cybersecurity Controls, Liquidity Risk Management Practices, and Compliance with the SEC’s Regulation SCI
  • Data Analytics
    • Anti-money Laundering Compliance, Microcap Fraud, Excessive Trading, and New, Complex, and High-Risk Products

FINRA Investor Alerts: FINRA provides periodic alerts that highlight products and sales practices of particular concern, which Firms may use to supplement training materials. It is always best practice to consider these topics. For investor alerts, click here.

FEA Semi Annual Update – The Securities Industry/Regulatory Council on Continuing Education (Council) publishes the Firm Element Advisory (FEA) semi-annually to highlight current regulatory and sales practice topics for possible inclusion in Firm Element training plans. The FEA briefly identifies each topic and provides links to relevant documents issued about the specified subjects.  For access to FINRA’s 2015 Firm Element Advisory, click here. A link to a matrix indicating topics covered in previous editions is imbedded within the Advisory.

Topics covered in this update include: Alternative Investments, Anti-Money Laundering, Business Continuity, Communications with the Public, Corporate Finance, Customer Accounts, Cybersecurity, Dispute Resolution, Equity and Debt Research, Financial Responsibility Rule for Broker-Dealers, Margin and Margin Accounts, Municipal Securities, Options, Private Placements, Public Offerings, Registration and Disclosure, Sales Practice and Supervision, Sanction Guidelines, Trading Practices and Supervision, and Transaction Reporting and Data Dissemination

AVAILABLE RESOURCES TO ACCOMPLISH BROKER-DEALER TRAINING

FINRA Annual Conference: Held in Washington, DC, the Annual Conference is a comprehensive overview of several timely regulatory and compliance topics.  FINRA also provides several online resources to cover a firm’s training needs. Member firms may register for free access to recordings of all 2015 Annual Conference sessions. The sessions cover a myriad of topics, which are listed below. To register for free access, click here.

Topics Covered at the Conference included: Alternative Investments and Complex Products, Common Examination Findings and Compliance Practices, Common Examination Findings and Lessons Learned, Communication with the Public, Current Key Regulatory Initiatives in the Fixed Income Markets, Cybersecurity, Detecting and Fighting Fraud, Effective Approaches to Risk Management, Enhancing Anti-Money Laundering Procedures, Financial and Operational Considerations, Identifying, Prioritizing and Managing Conflicts of Interest, Investment Banking, Detecting and Preventing Misconduct, Outside Business Activities, Senior Investors and Suitability, Supervision, and Consolidated Account Statements

Podcasts: FINRA provides free podcasts online that highlight news, regulatory updates, and other compliance topics. To access the free FINRA podcasts, click here.

FINRA also provides free webinars which include panel discussions with FINRA staff and industry experts and also feature online resource materials. To access the free FINRA webinars, click here. Some of these programs offer completion tracking and deliver virtual compliance training that may be suitable for Firm Element Continuing Education.

Firms can also elect other training delivery methods to address training needs. Examples of training delivery methods may include articles, meetings, roundtable, an annual compliance meeting, industry/regulatory conferences, etc.

Whatever method of training and delivery, Firms are reminded to keep a record to evidence annual broker-dealer training. The Firm may be required to provide proof to FINRA that all covered individuals completed training assigned.

 

 

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