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Often times, broker-dealers decide to restructure and make changes in organization. These changes in organization may be in the form of a merger, acquisition, or a succession. Once a firm has decided to restructure, there are many questions that a firm should consider in order to make the transition easy in relation to FINRA. Please note that the information that will be discussed is only in relation to FINRA. There may be other non-FINRA systems that you should consider. Have You Reviewed Rule 1017? Rule 1017 establishes that a firm must receive FINRA approval to undergo certain changes in organization Read More....
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Identification of Politically Exposed Persons (PEPS) is vital because due to their position and influence, many PEPs are in positions that potentially can be abused for the purpose of committing money laundering offenses, corruption, bribery and terrorist financing. As a firm, in order to comply with the requirements of monitoring for politically exposed persons (a 2001 US Patriot Act Regulation), it is important to understand what or who a politically exposed person could potentially be. Without this, many firms may only be partially complying with the requirements. The term “politically exposed persons” generally includes a current or former senior foreign Read More....
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On May 22, 2015, the Securities and Exchange Commission (SEC) approved certain amendments to MSRB Rule G-14 related to transaction reporting, which became effective on July 18, 2016. MSRB Rule G-14 requires dealers to report all executed transactions in most municipal securities to the MSRB’s Real-Time Transaction Reporting System (RTRS) within 15 minutes of the time of trade, with limited exceptions. RTRS serves the dual objectives of price transparency and market surveillance. The MSRB makes transaction data for transparency purposes available to the general public through the Electronic Municipal Market Access (EMMA) website at no cost, and disseminates such data Read More....
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We have all heard the stories about small or startup companies looking to raise capital and being approached by “finders” offering to help them to meet their goals. In exchange for such services, they only request 3% of the money raised by their investors. That’s not bad, right? Wrong. The company has now violated securities laws and opened themselves up to a whole new world of repercussions. So, let’s examine this scenario from the start. Is the “finder” actually engaging in activities that would require registration with a broker-dealer? Engaging in the business of effecting a securities transaction requires registration. Read More....
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As should be expected, broker dealers are not free to communicate with the public, including retail and institutional investors, without restrictions. The regulation of communications with the public minimizes, although it does not eliminate, the chance that the public will be misled by a firm’s advertisements. FINRA Rule 2210 establishes the standards for the content, approval, recordkeeping, and filing of communications with FINRA. It is important to understand that all communications do not fall within the same category. FINRA categorizes communications into three types: Retail communication-any written communication distributed or made available to 25 or more investors in a 30 Read More....
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On May 11, 2016, the Financial Crimes Enforcement Network (FinCEN) issued its final rules to strengthen the customer due diligence requirements for covered financial institutions. Broker-dealers are deemed a “covered financial institution” and therefore must comply with the new rules, which includes a requirement to verify the identity of certain beneficial owners of legal entity customers (for example, corporations, partnerships, trusts). This beneficial ownership requirement, as it is called, becomes effective May 11, 2018. We provide an overview of the new requirement through a series of Questions & Answers (Q&As). 1. Who Is Considered a Beneficial Owner of a Legal Read More....
