Conquering Current Compliance Challenges
June 12, 2019 | 2:00 - 2:30 PM EST

Conquering Current Compliance Challenges
Recorded: May 15, 2019 
Includes: Best Practices, Key Regulatory Issues and Compliance Tips
Includes: 23 Best Practices, 5 Peer-tested tools and 15 No Action Letters

Cybersecurity Strategies to Ensure SEC Compliance, 2nd Edition
Includes: 24 Best Practices, 16 Tools, 4 Risk Alerts and IM Guidance

FINRA is on record in stating that a broker-dealer’s systems of supervision, risk management and controls are essential safeguards to protect and reinforce a firm’s culture.  Strong supervisory programs also prevent inadvertent harm to customers, as well as defend against deliberate acts of malfeasance, the SRO has stated.
FINRA has backed up these statements with new supervision rules that became effective Dec. 1, 2014.  The SRO claims that three new FINRA rules (rule 3110, rule 3120 and rule 3130) “form a general overarching regulatory scheme for the supervision of firms and their associated persons.”

Key components

The rules break down as follows:
  • FINRA rule 3110.  This rule requires a broker-dealer to establish and maintain a system to supervise the activities of its associated persons that is reasonably designed to achieve compliance with the applicable securities laws and regulations and FINRA rules.  Among other provisions, the rule sets forth requirements to designate and register branch offices and OSJs, conduct internal inspections and review transactions for insider trading.
  • FINRA rule 3120.The rule requires a firm to have a system of supervisory control P&Ps that test and verifies a firm’s supervisory procedures.  A firm must have supervisory control P&Ps to test and verify, at least annually, that its WSPs are reasonably designed.  The SRO notes that testing ensures a firm’s supervisory procedures are reviewed and amended regularly in light of changing business and regulatory environments.
  • FINRA rule 3130.The overarching intent of the many provisions to this rule is to increase attention to firms’ compliance programs by requiring “substantial and purposeful” interaction between business managers and compliance officers throughout the firm.
Look for examiners to test broker-dealers’ compliance with the new supervision rules.

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