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Broker -Dealer Services

Compliance Assessment

Are you confident in the execution of your firm’s compliance program – both at the supervisory levels and corporate level? Do you believe you are current with industry best practices? Our engagement with you for a Compliance Assessment will result in a review of your supervisory procedures and adherence to your documented procedures. Your RegMaven compliance consultant will understand your business model, the expertise executing the procedures, and the method in which they are executed as well as a discussion of resources available to your compliance department. At the completion of the Compliance Assessment we will prepare a proposal outlining the areas in need of improvement and suggested remedies – you can address in-house or contract with RegMaven to satisfy. 

FINRA Registration – NMA

FINRA New Membership Applications are processed in the New York City FINRA office. The registration process may be cumbersome depending upon various factors with the applicant; business model, funding source(s), corporate structure, and experience of management team and owner(s) roles. RegMaven has a comprehensive knowledge of working with clients regarding the regulatory requirements of processing NMA applications. Our registration team works closely with you to assure a comprehensive application in order to minimize FINRA inquiries during the process. This reduces the down time in the application process while FINRA is reviewing our responses. Our FINRA NMA service includes:

  • Understanding of your business, management team, owner(s), funding sources and financial projections
  • Designing and if required sourcing industry talent such as Supervisory Principals, FINOP and specific advisor skills
  • REstablishing FINRA CRD Account with funding procedures
  • Design and build of ALL required Compliance Manuals, AML, BCP and Privacy Policy
  • Management of all required documentation – business plan, financial pro forma, vendors
  • Review of firm’s supervisory program
  • Manage all FINRA inquiries and respond in a timely manner
  • Prepare principals for FINRA Membership Interview
  • Participate in FINRA membership interview with supervising district
  • Work with you throughout application process until FINRA decision for a fixed price agreement
  • Post-FINRA Approval Compliance review – 2hrs

FINRA Registration – Continuing Membership Application -1017 Filing
FINRA Continuing Membership Application is required when your business anticipates a change in business. This may include a change of ownership (greater than 24.99%), product line, increase in number of RRs or branch offices (over safe harbor) or any other change that FINRA would view as an expansion or implementing new ways of doing business. If you are not sure a CMA 1017 is required you can submit a Materiality Consult to FINRA discussing your change in business. The CMA process can be cumbersome depending upon the complexity of the change. This process is managed by the FINRA New York Office. A couple of important discussions to know 1) Do not engage in the activity until it is approved by FINRA, 2) The approval will not happen immediately – plan accordingly and 3) budget accordingly there is a FINRA Fee for submitting a CMA which is dependent upon the complexity of the change.

RegMaven’s services on the CMA 1017 filing are comprehensive and include all requirements for a fixed fee.

Outsourced Chief Compliance Officer – Registered Principal (S-24)

Broker-Dealers are permitted to outsource either the full function or registration of the CCO or can outsource the work and retain the responsibility.  The significant difference between the two is liability and cost.

CCO Registration – This is where your CCO consultant is registered with your firm and assumes control and liability of your Written Supervisory Procedures – better known as your Compliance Manual and supervisory procedures. Firms most likely to engage in this type of agreement with a consultant are M&A, Private Placement or Third Party Marketer.  Full service BDs require a full time on-site presence due to the activity and transactions being processed by the BD. Your CCO registered person will require all the applicable licenses to support the approved business lines.

CCO Outsource – in this scenario, the functions of the CCO are outsourced to a consultant, who performs the work, prepares reports, executes supervision, advises the firm’s registered CCO of risks and will continuously assess resources. Your Outsourced CCO will require all the applicable licenses to support the approved business lines for which he/she is responsible supervising.

Branch Exam Program- Broker Dealer, Bank BD

As noted in a joint SEC-FINRA release in November 2011 and FINRA NtM 11-54, branch office exams are an integral function of your firm’s Compliance Program.  FINRA has recently included in their routine exam program time to visit selective branch offices of the Broker-Dealer.  These branch office visits have uncovered numerous compliance deficiencies and have found the CCO and Broker-Dealer neglecting their supervisory responsibilities.

Regulatory Maven has developed a series of programs to assist Broker-Dealers with this issue.

Branch Office Exam

  • Review of branch office structure
  • Review of Form BR and U-4 of each RR affiliated with branch office
  • On-site branch office exam (announced or unannounced)
  • branch office findings report

Branch Office Exam – with High Risk Branch Identification

  • Review of firm’s supervisory program
  • Review of branch office structure
  • Review of Form BR and U-4 of each RR affiliated with branch office
  • Identify high risk branch offices – those most likely to be selected by FINRA during a routine exam, additional reports will be requested from BD
  • Review supervisory procedures with CCO on high risk branch office(s)
  • On-site branch office exam (announced or unannounced)
  • branch office findings report

Branch Office Exam – with High Risk Branch On-Site Consulting

  • Review of firm’s supervisory program
  • Review of branch office structure
  • Review of Form BR and U-4 of each RR affiliated with branch office
  • Identify high risk branch offices those most likely to be selected by FINRA during a routine exam, additional reports will be requested from BD
  • Review supervisory procedures with CCO on high risk branch office(s)
  • On-site interview with high risk branch office manager (and RRs if applicable) to discuss FINRA exam process should their office be selected
  • Assist branch manager with compliance office set-up regarding firm’s procedures
  • On-site branch office exam (announced or unannounced)
  • Branch office findings report

Compliance Consulting

Regulatory Maven provides on-going consulting services to clients in a retainer or  contract basis.  We strive to be available for firms at their time of need without the worry of “what’s this going to cost me”.  We work to understand firms and assess their needs and build a fixed-fee retainer for the contract period, preferable 1 or 2 years.  This approach allows the firm to budget for the resource while not having to compromise their need for Regulatory Maven’s depth of expertise.

Independent Anti-Money Laundering (AML) Procedural Test 

FINRA Rule 3310 requires each broker dealer to have completed an annual test of the firm’s AML procedures.  This test must be completed independently of those in the firm who are responsible to supervise those who execute the supervision. This has become a “hot topic” for the regulators – FINRA and SEC specifically. The key points of interest are the independence of the auditor, adherence to the your AML Procedures, SEC AML Regulations, FINRA Regulaions, accurateness of the firms AML Procedures and the vigorous execution of the procedures.

RegMaven conducts AML audits which are in-line with your business activities and risks. Retail or institutional our AML auditors design the procedural test to satisfy Rule 3310 while incorporating your business model and client account profiles.

FINRA 3012 (3120 12/2014) Supervisory Procedures Exam

FINRA, in a roundabout manner does provide broker dealers with tools to establish and maintain a compliance department – RULE 3012 (soon to be 3120).  Rule 3012 requires the broker dealer to annually test their supervisory procedures similar to SEC Rule 206(4)-7 requires for RIA firms. The 3012 test is a “show me” that the tested procedure in place and are functioning according to the firm’s Written Supervisory Procedures (WSP).  3012 is NOT an exam it is a test that the procedures are in place, documented, personnel are trained accordingly and they are functioning.  Rule 3012 is required in order to execute on Rule 3130 CEO Certification. Rule 3130 is a certification that the CEO signs acknowledging the existence of the firm’s supervisory procedures.  The CEO executes annually that there is a process in place to establish, maintain, review, test and modify these procedures. RegMaven conducts the firm’s 3012 test, prepares the 3012 report and prepares it for 3130 CEO certification and Board presentment.

Please contact RegMaven regarding custom designed 3012/3130 and 206(4)-7 tools for the firms use.

SEC/FINRA Books & Records Exam and Mock Exam

FINRA Rules 4510, 4511, 4512, 4513, 4514 & 4515 address many of the requirements for a Broker-Dealer regarding its Books and Records. Regulatory Maven suggests these exams to be conducted by an independent firm where the review is far more extensive than a 3012 Test or a 3010 Exam.  A Books and Records Exam will touch upon all aspects of the Broker-Dealer similar to a Regulatory Exam.

A Regulatory Maven mock exam will mirror that of a FINRA or SEC exam.  This exam will include a comprehensive in-depth review of the firm’s supervisory system, client accounts, trading practices, financial procedures, product supervision, branch network and RR practices.

Trade Desk Review 15c3-5 -Market Access

SEC Division of Trading adopted Rule 15c3-5 – Risk Management Controls for Broker-Dealers with Market Access. The rule is designed to identify and reduce the risks associated with firms having direct access to markets. Their supervisory procedures are designed to manage financial exposure, erroneous trade orders, or pre-set credit limits.

These exams are required and customized on a per client basis.

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