FINRA Rule 3130 serves as an annual requirement to focus on the firm’s overall compliance programs through purposeful interaction between executive members and compliance officers. You might be wondering how firms ensure compliance with this rule. In this blog, we will address some frequently asked questions related to the annual certification requirement and the surrounding process.
1. Who must complete the Rule 3130 Annual Certification?
The Chief Executive Officer (CEO) typically completes the certification. However, FINRA does allow an equivalent officer to complete the certification. For example, an equivalent officer can be a Co-Chief Executive Officer as long as both officers individually carry out all the obligations set forth under the rule. Each officer is responsible for the representations of the certification.
2. What is the deadline to complete the Annual Certification?
Firms must complete the certification annually. The deadline is no later than the anniversary date of the previous year’s certification.
3. What is the goal of Rule 3130?
Generally speaking, the goal of the Annual Certification requirement is to promote regular and meaningful interaction between senior management and compliance personnel to ensure that compliance is given the highest priority by a member’s senior executive officers.
4. What specifically is the CEO certifying?
The CEO is attesting that the firm has processes in place to establish, review, test, maintain, and modify the written compliance policies and written supervisory procedures. The firm must reasonably design the process to comply with applicable rules and regulations. The CEO must also have one or more meetings with the Chief Compliance Officer (CCO) in the preceding 12 months to discuss the processes.
5. What documentation must the CEO review?
As stated previously, the CEO must have one or more meetings with the CCO within the prior 12 months to discuss the required elements of the certification. A written report should summarize the results of the required testing and should be reviewed by the CEO, CCO, and any other officers deemed necessary to make this certification. Finally, the report should be presented and submitted to the firm’s board and audit committee (or equivalent bodies) at either their next scheduled meetings or within 45 days of the date of execution of the certification, whichever occurs first.
6. Who should be involved in this process?
The CEO should ensure that the firm has consulted with staff and key vendors. For instance, these may include outsourced consultants, internal staff, IT vendors, lawyers, and accountants.
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