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It is not an uncommon practice for a client to bring his or her money to a broker dealer for investing to grow their wealth. When this happens, how does your broker dealer invest it? Are there precautions in place to prevent your broker dealer’s registered representatives from mismanaging those funds? One type of mismanagement is excessive trading, also known as churning. This happens when a registered representative excessively buys and sells securities in a client’s account for the primary purpose of generating commissions instead of focusing on what is best for the client. While greed is usually the motivating Read More.... -
Safeguarding From Fraudulent Activity At any given time, natural disasters are occurring in various locations around the country. These types of situations are ripe for fraudulent activities. Bad actors surface around every corner, and it is imperative that your broker dealer does not become a victim of these criminals. The Financial Industry Regulatory Authority (“FINRA”) defines a bad actors as someone “who seeks to evade regulatory requirements and harm investors for their own personal gain.” A bad actor can show up in many ways and forms. Several red flags include: Someone within your broker dealer may receive an email requesting Read More.... -
It has been an exciting year for Securities Compliance Management (“SCM”). The Firm has successfully: Initiated numerous New Membership Applications (“NMAs”) for new firms seeking the Financial Industry Regulatory Authority’s (“FINRA”) approval, Initiated several Continuous Membership Applications (“CMAs”) for existing firms that are planning to undergo a material change in their line of business operations, Partnered with new broker-dealer and registered investment advisor firms to assist them with their FinOp and/or compliance programs, and Assisted in the buy/sell of existing broker-dealer firms. Along with the new relationships that Securities Compliance Management has established this year, the Firm is also incredibly Read More.... -
Is your broker dealer ready for disaster? Across the United States, various areas are facing disasters – fires in Hawaii, hurricanes in the Southeast, and tornadoes across the Midwest. These are just a few of the situations where Business Continuity Plans (“BCPs”) are imperative to be in place and current. FINRA Rule 4370 requires every broker dealer to have written procedures in place in the event that the broker dealer cannot be available in a time of emergency. Any event that disrupts business as usual gives rise to the needs for BCPs. This includes natural disasters, power outages, even events Read More.... -
Twenty years ago, when all of us worked in the office, the IT department was able to manage a broker dealer’s cyber security fairly well. All of the computers worked off of a main network where various firewalls and malware protection could be maintained on a regular basis. Then comes COVID and all personnel began to work remotely. Post COVID, much of the broker dealer workforce still works remotely. It has become the new normal. How can your broker dealer’s IT department and/or vendor make sure that everyone’s computer equipment is up to date with the strongest and most current Read More.... -
Broker dealers, specifically the Chief Compliance Officer (“CCO”), are required to review their firm’s compliance programs and procedures at least annually to ensure that all compliance areas are working in accordance with the rules and regulations set forth by the Securities and Exchange Commission (“SEC”) and the Financial Industry Regulatory Authority (“FINRA”). Per the Securities Exchange Act of 1934 under rule 17a-14, one area of review for broker dealers who maintain retail clients is Form CRS, the customer relationship summary. Form CRS contains various information regarding the broker dealer that is important for retail clients to know. Over the past Read More....
