Compliance Challenges for FINOPs

Compliance Challenges for FINOPs

In today’s ever-evolving broker dealer environment, a Financial and Operations Principal (“FINOP”) plays a vital role in ensuring the compliance and financial integrity of the broker dealer(s) that he/she is registered with. Due to constant changes within the regulatory landscape, FINOPs encounter numerous compliance challenges that demand their attention and expertise, and as a result, a FINOP must have the knowledge and experience to suggest strategies to the broker dealer to help effectively address these challenges. Below are a few common compliance challenges that FINOPs face along with strategies to help address them: – Regulatory Complexity: Broker dealers operate in Read more about Compliance Challenges for FINOPs[…]

Regulation Best Interest (“Reg BI”)

Regulation BI and Real-World Enforcement

When the Financial Industry Regulatory Authority (“FINRA”) initially proposed the Regulation Best Interest (“Reg BI”), many professionals within the financial services industry shrugged and treated it as another item that could be added to the daily pile of tasks, documentation, and industry noise. Three years into the practical application and enforcement actions, broker dealers are experiencing the consequences of resistance to change.  Fines, restitution, bans, and overall corrective actions can be significant, especially in respect to the originating event circumstances. Broker dealer responsibilities require establishment, maintenance, and enforcement of a supervisory system reasonably designed to achieve compliance with Reg BI’s Read more about Regulation BI and Real-World Enforcement[…]

Rule 4111

Rule 4111 Restricted Broker-dealer Obligations and Heightened Supervision

While the subject matters of FINRA Rule 4111 and heightened supervision do not happen with great frequency, they are two topics that need to be discussed because when these rules do come into play, they can change a broker dealer drastically. Restricted broker dealer obligations and heightened supervision go hand in hand, and your broker dealer risk can be mitigated by creating supervision practices that include proactive reviews during the hiring process. The Financial Industry Regulatory Authority (“FINRA”) Rule 4111 – Restricted Firm Obligations – lays out a series of steps that occur when a broker dealer receives a Restricted Read more about Rule 4111 Restricted Broker-dealer Obligations and Heightened Supervision[…]

FINRA Rule 2111 - Suitability in Broker Dealer Relationships

FINRA Rule 2111 – Suitability in Broker Dealer Relationships

Being a broker dealer in today’s environment is a complicated and complex role. Included in this complexity is ensuring that your broker dealer operates with the highest ethical standards and providing the best possible considerations for your client. Having your client’s best interest at the forefront is essential. Suitability, in the context of broker dealer relationships, is a fundamental principle that ensures that investment recommendations and strategies align with the client’s specific financial situation, investment objectives, and risk tolerance. By doing this, the broker dealer helps to safeguard the client from unsuitable investments that may not match the client’s financials Read more about FINRA Rule 2111 – Suitability in Broker Dealer Relationships[…]

Broker Dealer Advertising

Broker Dealer Advertising

Has your broker dealer investigated using advertising materials in order to attract new clients, promote a service that your broker dealer provides, or simply tried to establish your firm’s brand within the industry? Advertising is a great tool that can increase your broker dealer business opportunities, but it does come with rules and regulations. If you go to the Financial Industry Regulatory Authority ‘s (“FINRA”) website and search for “advertising” guidelines, your brain might possibly explode. It is overwhelming to say the least! There are so many rules set forth by FINRA and the Securities and Exchange Commission (“SEC”). Between Read more about Broker Dealer Advertising[…]

Initial Public Offerings and New Issues

Initial Public Offerings and New Issues

Trust and transparency are the cornerstones of the financial industry. This includes broker dealers. As part of this framework, the Financial Industry Regulatory Authority (“FINRA”) created Rules 5130 and 5131 to govern broker dealers regarding the issuance of new securities. FINRA Rule 5130 places restrictions on the purchase and sale of initial public offerings (“IPOs”). The primary goal of this rule is to prevent unfair allocation of new issues to industry insiders. Industry insiders include broker dealers, their associated persons, and immediate family members. If this restriction was not in place, the investing public may not have the opportunities that Read more about Initial Public Offerings and New Issues[…]