FINRA Archives - MasterCompliance

Regulation BI and Real-World Enforcement

Posted on December 7, 2023 by SCM Communications

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 Restricted Broker-dealer Obligations and Heightened Supervision

Posted on November 17, 2023 by SCM Communications

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 Encryption Best Practices

Posted on August 16, 2023 by SCM Communications

Twenty years ago, when all of us worked in the office, the IT department was able to manage a broker dealer’s cyber security fairly well. All of the computers worked off of a main network where various firewalls and malware protection could be maintained on a regular basis. Then comes COVID and all personnel began to work remotely. Post COVID, much of the broker dealer workforce still works remotely. It has become the new normal. How can your broker dealer’s IT department and/or vendor make sure that everyone’s computer equipment is up to date with the strongest and most current Read more about FINRA Encryption Best Practices[…]

Form CRS Observations

Posted on June 27, 2023 by SCM Communications

Broker dealers, specifically the Chief Compliance Officer (“CCO”), are required to review their firm’s compliance programs and procedures at least annually to ensure that all compliance areas are working in accordance with the rules and regulations set forth by the Securities and Exchange Commission (“SEC”) and the Financial Industry Regulatory Authority (“FINRA”). Per the Securities Exchange Act of 1934 under rule 17a-14, one area of review for broker dealers who maintain retail clients is Form CRS, the customer relationship summary. Form CRS contains various information regarding the broker dealer that is important for retail clients to know. Over the past Read more about Form CRS Observations[…]

FINRA Rule 3110 Amendment Proposals

Posted on June 20, 2023 by SCM Communications

The Financial Industry Regulatory Authority (“FINRA”) Rule 3110 gives explicit directives on supervision of all persons related to the broker dealer in order to stay in compliance with all applicable FINRA rules and regulations. Although it takes a solid compliance program to achieve this, it has been manageable. Enter COVID-19: “Stay at home for two weeks to flatten the curve” they said. With that, employees packed up their work, and so began the lifestyle of working from home (“WFH”). The Financial Industry Regulatory Authority had to ease up on broker dealer’s completing branch audits during this time simply due to Read more about FINRA Rule 3110 Amendment Proposals[…]

FINRA Audit Preparation

Posted on June 8, 2023 by SCM Communications

For the broker dealer, there are a few things that are certain in life, and one of those happens to be Financial Industry Regulatory Authority (“FINRA”) audits. No broker dealer wants to get a FINRA examination call. However, there are multiple ways that a broker dealer can be prepared for their firm’s FINRA exam. The most important thing a broker dealer can have in place is a solid compliance program. This includes but is not limited to: Knowing where your broker dealer’s books and records are stored and how to easily access said files Being able to clearly explain your Read more about FINRA Audit Preparation[…]