Safe Harbor Rule 3a-4: Investment Advisory Programs

One of the key differences between an investment company and a registered investment advisor (RIA) is that advisers are in the business of providing investment advice to others, while an investment company is primarily engaged in the business of investing in securities themselves. Although advisors invest in securities on behalf clients, they do it on an individualized basis unlike investment companies that invest on behalf of clients on a collective basis. If any of a firm’s investment advisory programs are determined to be an investment company then Read More…

FINRA’S COMPLIANCE CALENDAR- NOVEMBER 2017

As November approaches, let’s take a look at the upcoming deadlines and educational opportunities that are on FINRA’s compliance calendar for the month.   Please note that the calendar does not include all regulatory and filing responsibilities for firms.  Therefore, you should check other resources to ensure that your firm does not miss any important deadlines. Read More…

FINRA Rule 4530, Customer Complaints in the Social Media Era

As technology continues to advance, the Financial Industry Regulatory Authority “FINRA”) must address how certain regulations will be interpreted as it relates to social media platforms.  FINRA Rule 4530 requires firms to promptly report to FINRA, no later than 30 calendar days, after it knows or should have known that the firm or an associated person of the firm is the subject of any written customer complaint involving allegations of theft or misappropriation of funds, securities, or of forgery. Under the rule, a customer is defined as any person, other than a Read More…

What is the SIE Exam?

As mentioned in our previous post, What is on the Series 7 exam, the FINRA has restructured the examination process and implemented a new exam, the Securities Industry Essential exam (“SIE”).  On October 1, 2018, the SIE exam will become a prerequisite to all of the FINRA’s representative-level qualification exams (“rep-level exams”). PURPOPSE OF THE[…]

Large Trader – Rule 13h-1 (Part 2)

For Part 1, please see  Large Trader-Rule 13h-1 (Part 1).  Part 2 A large trader is required to file a Form 13H Initial Filing promptly after effecting aggregate transactions equal to or greater than the Identifying Activity Level threshold.  After initial filing, Rule 13h-1(b)(1)(ii) specifies that an annual filing must be made within 45 days after[…]

The Importance of a Chinese Wall in Multi-Service Securities Firms

Multi-service securities firms have a high risk of insider trading as information can seep through to other departments.  The antifraud provisions of the federal securities laws restricts all persons from trading based on material non-public information.  Therefore, multi-service securities firms such as those that offer investment banking, corporate counseling, and retail broker-dealer services must take the necessary steps to prevent the interdepartmental flows of material non-public information about corporate clients.  To prevent such occurrences, it is required that firms build an internal Chinese Wall. Read More…