Is your small broker-dealer drowning in boxes and boxes of paper? Do you cringe every time you think of storing yet another 50+ page document? Are you interested in exploring the benefits of cloud-based storage? If you answered “yes” to any of these questions, you must first consider your firm’s regulatory requirements for electronic storage media.
In the recent “2019 Report on FINRA Examination Findings and Observations,” one of the topics highlighted was the use of digital communications. This can include a wide range of social media, email, text messaging, and various other digital tools. The regulatory requirements pertaining to the usage of digital communications are outlined in Exchange Act Rule 17a-3 and 17a-4 and FINRA Rules 3110(b)(4) and 4510. These rules require procedures pertaining to the usage of these types of communications, as well as the appropriate maintenance of the communications in the form of books and records.
Today, investment advisers and broker-dealers face many challenges when providing advice to and working for senior investors. Many seniors are living with or approaching diminished capacity due to Alzheimer’s, dementia, and/or other health-related issues. Unfortunately, these health issues create vulnerability for financial exploitation from caregivers, family members, neighbors, friends, medical professionals, lawyers, clergy, bank employees, or financial service professionals.
Investment Adviser Principal and Agency Cross Trading practices was the topic of a recent OCIE Risk Alert. The Investment Adviser’s Act Principal Transactions Section 206(3) indicates “Investment Adviser’s acting as a principal for his own account, knowingly to sell any security to or purchase any security from a client, or acting as broker for a person other than such client, without disclosing to such client in writing before the completion of such transaction the capacity in which he is acting and obtaining consent of the client to such transaction” are prohibited unless the appropriate disclosures and consent procedures are addressed and completed according to the compliance requirements.
On May 23, 2019, the SEC, NASAA, and FINRA published a year-end review of the Senior Safe Act which became federal law one year ago. In doing so, they also issued a Fact Sheet to help raise awareness with financial institutions and describe how the Act’s immunity provisions work.
During April and May 2019, FINRA introduced a new AML podcast. FINRA’s unscripted podcast explained the importance of a solid AML program, its importance to the overall industry, and best practices. Blake Snyder and Jason Foye of FINRA’s AML investigative unit were the guest speakers.
In May of 2017, FINRA released a Retrospective Rule Review 17-20 requesting comments on the effectiveness and efficiency of its Rule 3270, Outside Business Activities (“OBAs”) of Registered Persons, and Rule 3280, Private Securities Transactions (“PSTs”) of an Associated Person. Then, in February of 2018, FINRA issued Regulatory Notice 18-08 seeking additional comments on a proposed new rule, FINRA 3290, to consolidate current FINRA Rule 3270 and current FINRA Rule 3280. The proposed rule change is a result of FINRA’s retrospective rule review the year before. FINRA again sought comments on streamlining and bringing the rule up to date.
If you are a broker dealer or a supervisor at a broker dealer, I’m sure you have come across the terms Written Supervisory Procedures, Supervisory Procedures, and Compliance Systems. How many of you really know the difference, and before your eyes glaze over the rest of the article, how many of you know how to properly execute these concepts…. I’ll wait…….
Great! Now that I have your attention, there is no need to panic. The following post will walk you through the differences, some key concepts, practice pointers, and other factors you need to be aware of.
Expense sharing agreements between broker-dealers and third parties are a hot topic for FINRA and the SEC. Firms and their FINOPs should fully understand the guidelines provided within Notice to Members 03-63.
Welcome to the third and final part in our series on the three main suitability obligations outlined in FINRA Rule 2111 (Suitability). As with our earlier posts, “FINRA Rule 2111: Reasonable-Basis Suitability” and “FINRA Rule 2111: Customer-Specific Suitability”, we will begin with a brief overview of the three main suitability obligations imposed on broker-dealers and their associated persons; then, this particular blog will focus in on Quantitative Suitability.