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The U.S. Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) has proposed rulemaking that would require registered investment advisers to establish anti-money laundering (“AML”) programs and to file suspicious activity reports (“SARs”). The new requirements, as proposed, may impose significant regulatory burden on certain investment advisers. In this blog post, we provide a summary of the proposal to help your firm assess the potential impact, if any, the new requirements would have on your firm’s business. We conclude by providing, as a reminder, a list of the limited AML requirements that currently apply to investment advisers. FinCEN’s Proposes AML Requirements for Read More....
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We have updated this post! We are leaving this post up as to not disturb any saved links; however, please visit our more recent post, Customer Identification Program (CIP): Definitions and Requirements, for current information on the topic. [Continued from Customer Identification Program (CIP) – Part I] The CIP rule defines an account as a formal relationship with a broker-dealer established to effect transactions in securities. These transactions may include, but are not limited to: purchasing or selling securities; loaning and borrowing securities; and holding securities (or other assets) as safekeeping or collateral. This definition does have two exclusions, though. Read More....
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We have updated this post! We are leaving this post up as to not disturb any saved links; however, please visit our more recent post, Customer Identification Program (CIP): Definitions and Requirements, for current information on the topic.A broker-dealer must establish, document, and maintain a written Customer Identification Program (CIP) as a part of the broker-dealer’s anti-money laundering (AML) compliance program (31 CFR 1023.220). The CIP must be appropriate for the broker-dealer’s size and business, and it must outline the following procedures: identity verification procedures; recordkeeping procedures; procedures for determining whether a customer appears on any government lists for suspicious Read More....
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NASD Rule 1017 is FINRA’s rule related to events which trigger a broker-dealer’s requirement to file a continuance in membership application (“CMA”). As background, events that require a broker-dealer registered with FINRA to file a CMA are as follows: a merger with another member firm; a direct or indirect acquisition of another member; direct or indirect acquisitions or transfers of 25 percent or more in the aggregate of the firm’s assets, or any asset, business or line of operation that generates revenues comprising 25 percent or more in the aggregate of the firm’s earnings measured on a rolling 36-month Read More....
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The topic of due diligence is widely discussed regarding the financial services industry. Due diligence of products. Due diligence of potential employees. Due diligence of client suitability. But, what exactly does it mean when applied to financial services and what does it mean to representatives? “Due diligence” is commonly defined as an investigation of a business or person prior to signing a contract, or an act with a certain standard of care. Due diligence, in the financial services world, is commonly seen as the process of investigation and evaluation, into the details of a potential investment, such as an examination of Read More....
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Last month, Stephens Inc. was censured by FINRA and fined $900,000 for failing to properly supervise “flash” emails sent by its research department. According to FINRA Rule 3110, firms must have supervisory procedures established which include procedures for the review of incoming and outgoing written (including electronic) correspondence and internal communications relating to the member’s investment banking or securities business. The issue began when Stephens Inc.’s research analysts sent flash emails to the sales and trading personnel. Although the research analysts sent the flash emails internally, the lack of supervision created the risk that material non-public information may have been included Read More....
