Broker dealers are responsible for maintaining compliance with financial regulations and industry requirements in their day-to-day operations. Regulatory consulting companies support firms with compliance needs, and they assist with regulatory guidance, compliance reviews, and support for in-house compliance teams. Here are some steps for maintaining broker dealer compliance in a changing environment:
Hire CCO Services
A Chief Compliance Officer oversees a firm’s compliance program, acting in a supervisory capacity. They review and approve outside activities, and they approve outside brokerage accounts. Outsourcing CCO services allows firms to receive support from a FINRA-registered consultant without hiring a full-time, in-house CCO.
A CCO consultant can review and approve advertising materials and file them with the FINRA Advertising Regulation. They also help the firm comply with rules surrounding public communications; this includes assisting with social media and written correspondence. CCO services also include offering heightened supervision for emails, conducting random reviews to promote broker dealer compliance.
Complete Required Registrations
Staying up to date with Central Registration Depository requirements helps prevent compliance errors such as lapses in registration. Completing registration on time is a requirement for broker dealers, and responsibilities include filing Forms U4, U5, and BD. Working with a regulatory consulting company helps them stay informed about relevant CRD requirements.
Consulting companies provide training for broker dealers, and they monitor regulatory training to promote compliance. They also help manage responsibilities such as disclosure reporting and person licensing requirements. Other CRD requirements include facilitating exam scheduling, completing fingerprint cards, and performing quarterly reviews of the FINRA contact system.
Becoming a member of FINRA includes filing the required documents. When a FINRA firm makes significant changes to its business operations, they are required to file a continuing member application; this is the 14 standard Rule 1017 application. A regulatory consulting firm can respond to FINRA requests on behalf of the firm. They also work to receive approval after paperwork has been filed.
Monitor Files
Compliance risks can include insufficient documents and lack of organization, so files should be monitored based on internal policies. This includes tracking customer account files and their associated information, such as privacy notices and Anti-Money Laundering checks. Having a chart helps organize information about registered representatives and maintain records related to the Securities Investor Protection Corporation. A regulatory consulting company also assists with monitoring FINRA files, including the member agreement and FINRA correspondence. They receive the required disclosures from registered representatives and can create customized disclosure forms as needed. These files include information about personal trading and Outside Business Activity.
Conduct Business and Policy Reviews
Annual business operation reviews provide additional insight into how the firm maintains compliance, allowing broker dealers to make required changes as needed. These reviews can include managing FINRA Web CRD records and regulatory filing requirements. The business review addresses compliance and supervision of personnel, structures, control, and employee files. A CCO must also complete 3120 testing and create the Annual Supervisory Control Report. These outline the findings of the review and display actionable results for the firm to take.
Performing regular reviews helps the firm prepare for exams, as it brings attention to compliance issues that need to be addressed before examinations. A regulatory consulting team can also conduct mock exams, going over the examination process to help broker dealers know what to expect. A CCO interacts with regulators before and during exams on behalf of the firm.
Regular policy reviews also confirm your policies remain in compliance. Consultants perform periodic reviews of policies and procedures manuals and write the required updates. They also obtain representative certifications as needed, and they verify the policies are distributed to personnel. Policies include:
- Written Supervisory Procedures
- Anti-Money Laundering Programs
- The Business Continuity Plan
- Firm Element Needs Analysis
- The Training Plan
Learn More About Broker Dealer Compliance
Taking steps to maintain compliance in a broker dealer firm helps prevent financial repercussions and regulatory consequences. This includes completing requirements such as CEO certification, which is required by FINRA Rule 3130. A team from a regulatory consulting company assists the firm with conducting annual compliance meetings, including developing and presenting meeting content and providing follow-up support that keeps representatives updated on requirements. To learn more about broker dealer compliance, find a regulatory consulting company today.
