A broker dealer is expected to register with FINRA, and they need to follow regulatory compliance stipulations. Regulatory consulting companies can assist broker dealer firms by providing comprehensive compliance consulting services. Here are a few efficient practices for broker dealer compliance:
Create and Update Policies
The FINRA registration process for broker dealer firms includes creating policies for the firm to follow. A firm is required to create applicant manuals; these include the Written Supervisory Procedures and a Business Continuity Plan. Other required manuals include the Continuing Education Program and the Anti-Money Laundering Program. Having written policies and procedures provides a reference for the firm to follow for its compliance program.
A qualified compliance team from a regulatory consulting company is knowledgeable about regulatory updates and broker dealer compliance. The consulting company can create and finalize the manuals for the firm. They periodically review the manuals and write updates as needed. The team also makes sure to distribute the policies to associated personnel; this helps spread awareness to reduce compliance issues related to miscommunication.
Engage in Supervisory Practices
Ongoing compliance requirements include overseeing the compliance program. This requires the services of a Chief Compliance Officer (CCO), who provides oversight and compliance guidance for daily issues. A regulatory consulting company can perform the CCO role or support an in-house hire; this role includes the responsibility of approving firm practices to make sure they are following regulatory requirements.
The CCO should monitor and approve all business activities related to brokerage accounts and personal trading. CCOs also perform random reviews of personnel emails, and they can provide guidance for different public-facing communication forms. This includes:
- Social media
- Written messages
- Instant messages
This allows CCOs to make sure all communication follows compliance standards, including keeping client communication and information secure and private. A CCO also reviews sales literature and advertising; they make sure these are compliant and do not provide inaccurate information about personnel and sales. They also file marketing information through FINRA Advertising Regulation.
Meet Filing Deadlines and Requirements
Accurate filing and registration help prevent lapses in registration. Broker dealer firms are required to register with the Central Registration Depository, and they are expected to submit forms BD, BR, U4, and U5. Other requirements include associated person licensing.
A compliance team may offer access to filing services, which helps prevent missed deadlines. The team organizes required files and related information, creating a chart of registered representatives. They also make sure the team has representative files that contain Form U4 and fingerprint cards; other representative information includes disclosure files with trading information.
Organizing customer files makes it easier to navigate newer accounts. Broker dealers should have FINRA files available; this includes member agreement files and Form BD. A compliance team can make sure the firm has access to records of correspondence and customer complaints.
Fulfill Disclosure and Certification Requirements
Compliance requirements include disclosure reporting. Broker dealer firms provide disclosure forms for registered representatives and business activities. In some circumstances, this may require customized disclosure forms. A compliance team helps with obtaining required documents and disclosures; this includes those for private securities transactions.
Compliance teams also assist with required certifications, such as the FINRA-required CEO Certification Process. They help prepare a draft certification report and the CEO Annual Compliance and Supervision Certification. A qualified compliance team makes sure these are completed in a timely manner.
Host Compliance Meetings
Annual compliance meetings inform representatives about requirements, and this can include information about updates or changes in firm policies. A compliance team assists with the process by creating customized agendas and materials. They also work with the firm’s management personnel to deliver the materials during the meeting. Providing follow-up information to representatives who were not able to attend helps distribute the required compliance materials; this helps prevent representatives from operating on outdated information.
Maintain Broker Dealer Compliance
Following good organizational and supervisory practices lowers compliance program risks, such as lacking correct documentation or having inadequate supervision. A compliance team can assist start-ups by creating a scalable compliance program. Regulatory consulting companies help perform the required annual reviews, and they inform the firm about compliance gaps that should be addressed. Find a FINRA-registered regulatory consultant today to explore their services.
