January 21, 2021

Blog | MasterCompliance

  • The financial services industry is heavily regulated.  In order to enter into the industry and sell securities, you must first prove that you have the competence.  In order to showcase your competency, the Financial Industry Regulatory Authority (“FINRA”) requires that you take the Series 7 exam, also known as the General Securities Registered Representative Qualification Exam.  In order to take the exam, you must be sponsored by a FINRA member firm. Currently, the Series 7 is broken down into two three-hour segments.  The exam has 250 questions that are scored and an additional 10 questions that are pretested.  The questions Read More....
  • Rule 13h-1 helps the SEC identify and obtain trading information on market participants that conduct a substantial amount of trading activity in the U.S. securities market. The rule imposes filing requirements on persons that meet the definition of “large trader.” A larger trader is any person that directly or indirectly, including through other persons controlled by such person, exercises investment discretion over transactions in NMS securities that equal or exceed: 2 million shares or $20 million during any calendar day; or 20 million shares or $200 million during any calendar month. The aforementioned thresholds are commonly referred to as the Read More....
  • SEC Rule 206(4)-7 requires investment advisers to review, no less frequently than annually, the adequacy of its written compliance policies and procedures and the effectiveness of their implementation. The SEC expects annual reviews to take into consideration any compliance matters that arose during the previous year, any changes in the business activities of the adviser or its affiliates, and any changes in the Investment Advisers Act or related rules that may impact the adviser’s policies and procedures. In addition, the SEC expects that an investment adviser will review its compliance policies and procedures on an interim basis in response to Read More....
  • Established by FINRA, the Order Audit Trail System (OATS),  is an integrated audit trail of order, quote and trade information for all NMS (National Market System) stocks and OTC equity securities. As part of FINRA’s surveillance activities, Rules 7400 through 7470 (OATS Rules) and Rule 4554, OATS requires electronic auditing and reporting capabilities on all stock and equity orders, quotes, trades and cancellations. According to Rule 7430 (updated from NASD Rule 6953), all computer clocks and timestamping devices must be synchronized to be regarding a time source as designated by FINRA. This data can be collected during the day and Read More....
  • FinCEN
    What is the difference between FinCEN and OFAC?  Both organizations are bureaus of the U.S. Treasury department; however, FinCEN requires searches for suspected criminals and OFAC searches identify known criminals.  FinCEN The Financial Crimes Enforcement Network (FinCEN) issues 314(a) requests, approximately every two weeks.  When these notices, which identify individuals and entities suspected of illegal activities, are received, each Broker/Dealer is required to access the secure website, log-in and review the lists of businesses and individuals to determine if there is a relationship with any party identified on the system.  To ensure that proper personnel receives these e-mail notifications, a Read More....
  • wrap fee program
    A wrap fee program is an arrangement between financial institutions (typically broker-dealers and investment advisers) that enables customers to pay an all-inclusive fee (usually as a percentage of assets) for investment advisory services bundled with various other services, such as execution, clearing, and custodial services. These programs can be referred to by several different names such as asset allocation programs, asset management programs, investment management programs, mini-accounts, and separately managed accounts. The defining feature for all of these is that they offer bundled investment management and brokerage services for one fee. Wrap fee programs create a number of suitability issues for Read More....