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The Securities and Exchange Commission (SEC) has approved a new clock synchronization standard for computer clocks used to record events in NMS securities and OTC equity securities. The current FINRA standard is a one-second tolerance. The new standard – new FINRA Rule 4590 – reduces that tolerance to 50 milliseconds. The new synchronization rule will go into effect on August 15, 2016. From that date, firms have six months (until February 20, 2017) to apply the 50 millisecond standard to clocks that capture time in milliseconds. Firms have 18 months from the effective date (until February 19, 2018) to apply the Read More....
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As members of the securities industry, we have all completed and filed a Form U4 – some of us have done it multiple times. But, did you ever consider how important it is to keep your Form U4 disclosures current to avoid enforcement action for failing to disclose material information? Outside Business Activities Under FINRA Rule 3270, you must report all Outside Business Activities to your firm and receive approval prior to engaging in such activities. Also, it is required that your Form U4 contains all of your approved OBAs. In recent months, FINRA has been conducting sweep examinations of Read More.... -
Those associated with broker-dealers are put in a position where they can easily commit financial crimes. We watch it played out in movies and we see it happening in real life. One preventative measure firms should take is to establish sound supervisory practices that require oversight of all associated persons’ outside brokerage accounts and transactions. This regulatory obligation is established in NASD Rule 3050. NASD Rule 3050 states that “a person associated with a member, prior to opening an account or placing an initial order for the purchase or sale of securities with another member, shall notify both the employer Read More....
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On July 6, 2016, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) added North Korean leader Kim Jong Un and other officials to the list of Specially Designated Nationals and Blocked Persons (“SDN List”) for human rights abuses. While it should not be terribly surprising that a political leader alleged by the United States to have caused millions of his own people to endure cruel hardships ended up on the SDN List, this recent designation by OFAC serves to remind broker-dealers and investment advisers of the importance of regularly verifying that existing clients are not on Read More....
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The Securities and Exchange Commission (“SEC”) recently proposed a new rule that would require registered investment advisers (“RIAs”) to adopt and implement written business continuity and transition plans. The proposed rule is designed to ensure that RIAs have plans in place to address operational and other risks related to a significant disruption in the adviser’s operations in order to minimize client and investor harm. “While an adviser may not always be able to prevent significant disruptions to its operations, advance planning and preparation can help mitigate the effects of such disruptions and in some cases, minimize the likelihood of their Read More....
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Around June 1, 2016, active FINRA member firms should have received an email asking them to take part in an individualized Risk Control Assessment Survey (“RCA Survey” or just simply “RCA”). The deadline for the RCA survey this year is Wednesday, July 20, 2016. But what, exactly, is the RCA Survey? FINRA utilizes the RCA survey to collect information from member firms about the risks associated with: the firm’s activities, the firm’s business model, the products and services the firm sells, and the types of clients and counterparties the firm deals with. FINRA uses this information to better understand the Read More....
