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FINRA visiting the front line…Your Branch Office(s)

Over the past several years FINRA’s Examiners (formerly NASD) were not instructed to visit with the front lines (branch offices & non-home office OSJs) of the broker-dealer without cause, until recently. Today, a routine FINRA exam includes branch office visits. After the lead examiner assembles the information about your firm, he/she reviews your business and the offices registered.  It is then determined which offices pose a high risk.

 

There are a number of factors included in this analysis – revenue, product mix, location to supervising OSJ, customer complaints, and discussions with home office staff to name a few.  A few branches might quickly come to mind.  Hold that thought for a moment; can you imagine what your branch manager (or a registered representative) would say to a FINRA examiner during the visit/exam? Scary thought isn’t it?

 

Just when you thought you had some semblance to your program, here is another compliance area for which you need to prepare.  Unfortunately, the unknown is the challenge.  If you want to be proactive for this event, you will need to assign resources to conduct an analysis of your branch office network. The results will need to be objective; saying “he’s a nice guy” or “he’s got the greatest clients and his reps look to him as a mentor” isn’t sufficient.  FINRA isn’t concerned with kindness or leadership ability.

 

Keeping you up at night?  It may.  How do you gain comfort that these “high risk” branch offices will represent your compliance program as you designed it when meeting with your regulator?  First, identify the offices; second confirm that you have the right people in the right positions, and then most importantly, EDUCATE and TRAIN them. Remember, a FINRA visit is much different than your routine branch office exam.

 

Regulatory Maven has designed specific branch office exam modules to address your concerns.  Contact us now to prepare your managers for the FINRA invasion of your branches.  Regulatory Maven can be reached at 603-965-7791 or contact us through our website at www.regmaven.com.

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