Broker Dealer Compliance
Broker Dealer Compliance can include compliance with accounting regulations, development of internal programs to mitigate operational risks, and adherence to financial regulations. Broker Dealer Compliance can be an extensive responsibility. Accounting regulations for broker dealers include the requirement of a licensed Series 27 to serve as the firm's CFO, maintenance of a minimum net capital specific to the firm based on type and operating costs, and completion of monthly or quarterly focus reports as specified by FINRA to name a few.
Broker Dealer Compliance also includes developing and maintaining a program to address all FINRA and SEC regulations pertinent to broker dealers. Broker Dealers are required to complete a number of independent compliance audits throughout the fiscal year including an independent AML Audit, a 3012 Supervisory Controls Review, and an annual review of the investment advisor for dually registered broker dealers and investment advisors. Each of the reviews is also to be accompanied by a senior management sign-off to be included in the compliance program. The broker dealer compliance program should be outlined in a written document known as the Written Supervisory Procedures Manual (WSPs). The WSPs should include all policies and procedures, including accounting compliance procedures as well as anti-money laundering procedures, a business continuity plan, and code of ethics.
Broker Dealer Compliance is the responsibility of every person at the firm. To oversee the program, the firm is required to have at least two Series 24 licensed individuals (unless a waiver for just one is granted). The Series 24 should be the firm's Chief Compliance Officer, responsible for seeing to it that all management teams understand the firm's compliance policies and procedures and hold their teams accountable. The CCO might oversee these individuals directly at small firms that don't have a large management structure. Ultimately, the CCO has supervisory responsibility to ensure that the firm and all individuals at the firm remain compliant with SEC and FINRA Regulations. Firms can outsource compliance tasks and audits so that the CCO is not too overwhelmed by this responsibility, but it is important to keep in mind that however much work is outsourced, a CCO can never outsource his / her supervisory responsibility and must always have controls to make sure that the outsourcing partner or management team overseeing compliance in certain areas are following the firm's written policies and procedures.
Broker Dealer Compliance also includes developing and maintaining a program to address all FINRA and SEC regulations pertinent to broker dealers. Broker Dealers are required to complete a number of independent compliance audits throughout the fiscal year including an independent AML Audit, a 3012 Supervisory Controls Review, and an annual review of the investment advisor for dually registered broker dealers and investment advisors. Each of the reviews is also to be accompanied by a senior management sign-off to be included in the compliance program. The broker dealer compliance program should be outlined in a written document known as the Written Supervisory Procedures Manual (WSPs). The WSPs should include all policies and procedures, including accounting compliance procedures as well as anti-money laundering procedures, a business continuity plan, and code of ethics.
Broker Dealer Compliance is the responsibility of every person at the firm. To oversee the program, the firm is required to have at least two Series 24 licensed individuals (unless a waiver for just one is granted). The Series 24 should be the firm's Chief Compliance Officer, responsible for seeing to it that all management teams understand the firm's compliance policies and procedures and hold their teams accountable. The CCO might oversee these individuals directly at small firms that don't have a large management structure. Ultimately, the CCO has supervisory responsibility to ensure that the firm and all individuals at the firm remain compliant with SEC and FINRA Regulations. Firms can outsource compliance tasks and audits so that the CCO is not too overwhelmed by this responsibility, but it is important to keep in mind that however much work is outsourced, a CCO can never outsource his / her supervisory responsibility and must always have controls to make sure that the outsourcing partner or management team overseeing compliance in certain areas are following the firm's written policies and procedures.