FINRA Rule 3310: Anti-Money Laundering Compliance Program

FINRA Rule 3310 sets forth minimum standards for the required anti-money laundering (AML) compliance programs to be implemented by broker-dealers. This written AML compliance program must be reasonably designed to achieve and monitor compliance with the requirements of The Currency and Foreign Transactions Reporting Act of 1970 (more commonly known as the “Bank Secrecy Act” or “BSA”) and with the implementing regulations declared thereunder by the U.S. Department of the Treasury. Read More…

FINRA Enhances Disclosure Review Process

As I’m sure you already know from reading our previous blogs on the subject, FINRA Rule 3110(e) (Responsibility of Member to Investigate Applicants for Registration) requires that member firms must “ascertain by investigation the good character, business reputation, qualifications, and experience of an applicant” prior to submitting a Form U4 and requesting to associate and register such an applicant with the firm. However, as recently announced, FINRA has made enhancements to its disclosure review process that will make this verification easier than ever.  Such enhancements will allow member firms to rely upon FINRA’s verification process for purposes of compliance with the requirement to conduct a search of public records relating to bankruptcies, judgments and liens.

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How to Register as an RIA: State Registration vs. SEC Registration

In our previous blog on Registered Investment Advisers (RIAs), “How to Register as an RIA: What is a Registered Investment Adviser?”, we discussed some important basics of RIAs – how does one define an RIA, what is Fiduciary Duty, why do RIAs need to register, what is the difference between state registration and SEC registration, etc. Today, we will return to the topic of state registration vs. SEC registration in order to provide a more thorough examination of the issue.

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How to Register as an RIA: What is a Registered Investment Adviser?

A Registered Investment Adviser, or “RIA” as it is commonly abbreviated, is a person or company engaged in the investment advisory business. That means that they engage in the regular business of providing, for compensation, either directly or through publication, advice on the value of securities or on the advisability of investing in, buying, or selling securities; or, they engage in the regular business of providing, for compensation, either directly or through publication, analyses or reports covering securities.

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FINRA Updates Anti-Money Laundering Template for Small Firms

Per the Bank Secrecy Act (BSA) and FINRA Rule 3310, FINRA member firms are required to establish Anti-Money Laundering (AML) compliance programs. To assist its smaller member firms with fulfilling these responsibilities, FINRA publishes the “Anti-Money Laundering Template for Small Firms”, which provides instructions, relevant rules, text examples, relevant websites, and other resources that can be used to develop an AML plan for a small firm.

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OBAs & PSTs: FINRA Seeks Comment on Proposed Rule

Last spring, FINRA began a review of its rules regarding Outside Business Activities (OBAs) and Private Securities Transactions (PSTs). The review was meant to evaluate the efficiency and efficacy of FINRA Rule 3270 (Outside Business Activities of Registered Persons) and FINRA Rule 3280 (Private Securities Transactions of an Associated Person). FINRA concluded that while Rules 3270 and 3280 are fulfilling their intended purposes, they could benefit from changes to make the rules more contemporary and present-day and to better align the goal of protecting investors with the reality of the current regulatory landscape and business practices. Based on its findings, FINRA has proposed a new rule governing OBAs and PSTs, meant to replace the current rules and reduce unnecessary burdens on member firms.

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FINRA Rule 2273-Recruitment Practices

FINRA has long been concerned with practices used by broker-dealers and their newly registered representatives to convince clients to transfer accounts from the representative’s old firm as well as the fees that are sometimes associated with such transfers.  To address this concern, FINRA Rule 2273 requires  broker-dealers to deliver an educational disclosure to potential clients in connection with recruitment practices and account transfers. Read More…

Large Trader – Rule 13h-1 (Part 1)

Rule 13h-1 helps the SEC identify and obtain trading information on market participants that conduct a substantial amount of trading activity in the U.S. securities market. The rule imposes filing requirements on persons that meet the definition of “large trader.” A larger trader is any person that directly or indirectly, including through other persons controlled by such person, exercises investment discretion over transactions in NMS securities that equal or exceed:

  • 2 million shares or $20 million during any calendar day; or
  • 20 million shares or $200 million during any calendar month.

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Annual Reviews – SEC Rule 206(4)-7

SEC Rule 206(4)-7 requires investment advisers to review, no less frequently than annually, the adequacy of its written compliance policies and procedures and the effectiveness of their implementation. The SEC expects annual reviews to take into consideration any compliance matters that arose during the previous year, any changes in the business activities of the adviser or its affiliates, and any changes in the Investment Advisers Act or related rules that may impact the adviser’s policies and procedures. In addition, the SEC expects that an investment adviser will review its compliance policies and procedures on an interim basis in response to significant compliance issues, changes in business activities, and new regulation.  Read More…