Broker-Dealer On-Going Compliance Support Program


Brace yourself. Broker-dealer ongoing compliance is not brain science, but could be – if you don’t have the time. Many broker-dealer firms do not normally have the time or capital to expend on compliance, yet they must. They provide their own clients with excellent client services, as they should, but face the ever-present problem of balancing client service with the demanding task of staying on top of all that the SEC and FINRA require of them in the daily, weekly, monthly and annual operation of their businesses.

Our broker-dealer ongoing compliance support program can help. Keeping in line with our philosophy that you begin with the simplest solution possible and work in reverse, adding only what must be added to become and remain in compliance, our goal is never to impress you with quantity, but with quality. Remember: “less but better.”

FINRA Annual Compliance Meetings

All broker-dealers are required to conduct an Annual Compliance Meeting. As part of our broker-dealer ongoing compliance support program we will prepare, and if requested, conduct the FINRA Annual Compliance Meeting as part of our ongoing compliance retainer program. All registered representatives and principals of your firm are required to be present at the Annual Compliance Meeting.

We will provide all necessary documents and educational materials to conduct the meeting, as well as conduct the meeting itself. Documents include procedural documents to conduct the meeting: the Annual Compliance Meeting Agenda, Annual Compliance Meeting Attestation, Annual Certification of AML Compliance Plan, Annual Certification of Written Supervisory Procedures, Annual Insider Trading Attestation, CE Materials Participation/Certification, and the Registered Representative Annual Compliance Interview package.

We also include a set of educational materials which we specifically select for your broker-dealer (according to your business lines and practices) and which will assist your firm in satisfying the Firm Element CE portion during the FINRA Annual Compliance Meeting.

Annual Business Continuity Plan (BCP) Review

FINRA requires each member firm to conduct an annual review of its Business Continuity Plan (“BCP”). In addition to an annual review, your firm must update its BCP in the event of any material change to its operations, structure, business, or location. BCP maintenance and review is part of our ongoing compliance retainer, or can be addressed separately at your convenience.

Annual FINRA Continuing Education Analysis & Training Plan

As part of our broker-dealer ongoing compliance support program we can conduct your broker-dealer’s annual FINRA Continuing Education Needs Analysis and prepare the written Continuing Education Training Plan pursuant to FINRA’s Continuing Education Firm Element requirement. We can provide all appropriate educational materials to satisfy the rule requirements. All materials are selected specifically with your firm’s approved business lines and any special training needs in mind. Additionally, we can provide training upon request.

Annual Disclosure Package

As part of our broker-dealer ongoing compliance support program we will develop and draft your broker-dealer’s initial and annual disclosure documents. Most of the notices within our disclosure packet are either required or recommended to be sent to your firm’s clients on initiation of your business relationship, as well as annually.

The notices within this Initial and Annual Disclosure Packet may differ depending upon the business your broker-dealer conducts but often include items such as: Regulation S-P Privacy Notice as per the Gramm-Leach-Bliley Act, the Business Continuity Plan Summary Disclosure Statement, the Anti-Money Laundering Customer Identification Program Notice, the SEC Rule 17a-3(a)(18) Customer Inquiries Notice and the SIPC informational notice. Each new client or investor should be provided with this packet upon initiation of the client or investor relationship and all existing clients or investors should receive this notice on an annual basis.

Annual Rule 3110/3120 CCO Report

This report encompasses testing your broker-dealer’s written supervisory procedures and supervisory controls procedures to meet your annual review requirements under FINRA Rule 3110 and FINRA Rule 3120. Rule 3120 requires that all broker-dealers establish, maintain and enforce a supervisory control system, including written supervisory control procedures. All procedures referred to in this guidance must be in writing. Your broker-dealer must have:

  • A designated principal(s) specifically responsible for defining, maintaining, testing and enforcing the supervisory control procedures.
  • Procedures for the annual testing and verification of supervisory procedures and supervisory control procedures, and for submission of an annual report to your broker-dealer’s senior management.
  • Procedures to amend or create additional supervisory procedures where the testing and verification process identifies the need for such action.
  • Controls to ensure that supervisory procedures stay current with changes in your broker-dealer’s business lines, business model, products and/or practices and with changes in the regulatory environment.

As part of our broker-dealer ongoing compliance support program we can prepare the report for your broker-dealer pursuant to these rules. As permitted under FINRA’s interpretive materials, the report will combine two reports: the written inspection report of the offices and the supervisory control system report.

Annual Rule 3130 CEO Certification

This one is very simple and straight forward. As part of our broker-dealer ongoing compliance support program we will draft, customize and provide your broker-dealer the annual FINRA Rule 3130 CEO Certification. Rule 3130 states that your Chief Executive Officer or other similarly titled and positioned person is required to certify annually that the broker-dealer has in place the processes detailed in the annual report; and that he or she has conducted one or more meetings with your Chief Compliance Officer in the preceding 12 months to discuss the broker-dealer’s processes and other matters set forth in FINRA Rule 3130.

Annual Rule 3130 Supervisory Control Compliance Meeting

FINRA Rule 3130 is intended to promote attention to a broker-dealer’s compliance programs by requiring substantial and purposeful interaction between business managers and compliance officers throughout the broker-dealer. To that end, your broker-dealer must:

  • Designate and identify to FINRA one or more Chief Compliance Officers (CCOs) through the FINRA Contact System on the FINRA Gateway Web site. The designated CCO must also be identified on Schedule A to Form BD.
  • Prepare an annual report detailing the processes your broker-dealer has in place to establish, maintain, review, test and modify written compliance policies and written supervisory procedures (WSPs) reasonably designed to achieve compliance with applicable rules and laws.
  • Have your Chief Executive Officer certify annually that the broker-dealer has in place the processes detailed in the annual report; and that he or she has conducted one or more meetings with your CCOs in the preceding 12 months to discuss the broker-dealer’s processes and other matters set forth in FINRA Rule 3130.
  • Submit the annual report to the broker-dealer’s board of directors and audit committee (or equivalent bodies, if any) at the earlier of their next scheduled meetings or within 45 days of the date of execution of the certification.

As part of our broker-dealer ongoing compliance support program we can assess your broker-dealer’s overall compliance program, including internal controls and written compliance and supervisory policies and procedures to determine if they are reasonably designed to ensure compliance with industry rules and regulations.

We can conduct a comprehensive analysis to identify areas of your broker-dealer’s business that are not adequately covered by a written policy or procedure. In addition to assessing the adequacy of your broker-dealer’s compliance program and its written supervisory policies & procedures, we can conduct deeper level testing to determine whether your broker-dealer’s procedures are being adequately implemented in compliance with applicable rules.

Annual Year End FINRA/State Registration Renewals

As part of our broker-dealer ongoing compliance support program we can assist your broker-dealer (and investment advisor) with annual registration renewals and ongoing Form BD and Form U-4 registration requirements. The FINRA registration renewal program facilitates the annual renewal of broker-dealer firms’ registrations, and those of their registered representatives’ FINRA, state/jurisdiction and SRO registrations. This annual program simplifies the registration renewal process with the payment of one amount to FINRA.

Prior to the generation of Preliminary Renewal Statements, we will send reminders for firms to review their registered persons to ensure that they have properly and timely reported all appropriate information to Web CRD and that all open branch offices have individuals assigned to them and are reported accurately.

At this time, firms will have the opportunity to submit a post-dated Form U5, Form BDW, and Form BR Closing/Withdrawal via Web CRD.

Submitting post-dated forms will prevent firms for being charged for registrations they no longer need in the upcoming year. We will assist firms in filing these forms and with meeting important deadlines to avoid unnecessary late fees. Fees incurred for new registrations requests filed after preliminary statements are produced will be reflected on a firm’s final renewal statement.

At the end of the process we will provide firms with a copy of their Final Renewal Statement along with detailed funding instructions. You should not be overwhelmed. In this area, we will be there to assist your broker-dealer through every step of this multi-month renewal process.

Anti-Money Laundering Plan Updates

As part of our broker-dealer ongoing compliance support program we regularly keep tabs on FINRA, SEC, and other regulatory bodies who provide updates. As new rules are published, we review these rules to ascertain whether they are applicable to your broker-dealer. If so, your AML Plan will be updated. We strive to keep the text of all our manuals accessible and easy to read; however, we are always available by phone or email to go over your procedures and updates with you. Please see our complete AML section of this site.

Business Continuity Plan Updates

As part of our broker-dealer ongoing compliance support program we will assist your broker-dealer with updating the Business Continuity Plan. FINRA Rules require each broker-dealer to create and maintain a business continuity plan and identifies certain requirements that each plan must address. Every broker-dealer must also disclose to its customers how its business continuity plan addresses the possibility of a future significant business disruption and how the broker-dealer plans to respond to events of varying scope. Broker-dealers are required designate two emergency contact persons and provide this information to FINRA via electronic process.

FINRA Web CRD Administration and Web CRD Registration Assistance

See our separate section below regarding how we can help with all aspects of Web CRD.

FINRA Contact System (FCS) Review and Maintenance

As part of our broker-dealer ongoing compliance support program we will conduct a quarterly review of your firm’s FINRA Contact System to ensure accuracy and, if necessary, effect any amendments which may be required.

Through the FINRA Contact System (FCS), FINRA maintains contact information records of all Executive Representatives, Chief Compliance Officers and other individuals required under FINRA rules and By-Laws. FINRA uses this information for regulatory communications, compliance purposes and ballots for district, Board and other elections. Firms must complete an annual verification of their contact information and also upon any material change whenever necessary.

Although this verification is an annual requirement, we like to take it a step further to provide our retainer clients with quarterly updates. In this way, our clients’ contact information is always current and accurate.

FINRA Examination Preparation and Assistance

As part of our broker-dealer ongoing compliance support program we provide FINRA examination preparation and assistance. We help broker-dealers manage FINRA exam to ensure efficient production of documents and reduce the regulatory burden. We will be available when necessary to assist your broker-dealer through the examination process, and help you respond to information and document requests from regulators. We will help guide you through the FINRA Examination process, which includes responding to FINRA’s Web Information Requests.  

FOCUS Reports

FINRA member firms are required to compose and submit FOCUS reports to FINRA pursuant to SEC Rule 17a-5. FOCUS is an acronym for “Financial and Operational Combined Uniform Single report” and is used to track a particular broker-dealer’s activity over a set period of time.

FOCUS reporting is essential for all broker-dealer registrations, and for continued financial compliance status. A FOCUS Report consists of a balance sheet, an income statement, a statement of changes in ownership equity, and a complete net capital calculation. FINRA staff review the FOCUS Report to monitor the broker-dealer’s financial trends and to determine if the firm has maintained net capital compliance which allows the broker-dealer to continue business as usual without disruption.

The FOCUS system requires broker-dealers to electronically submit these Reports to FINRA. FOCUS Reports are submitted on a quarterly or monthly basis depending on the broker-dealer’s business model by a Series 27 or a Series 28 licensed Financial and Operational Principal, otherwise known as “FINOP.”

As part of our broker-dealer ongoing compliance support program and in partnership with an affiliated compliance consulting firm we can provide your broker-dealer with a FINOP to be registered with the broker-dealer or who can provide financial reporting and bookkeeping support to your broker-dealer’s current FINOP.

Written Supervisory Procedure Updates

Every broker-dealer is required to establish, maintain and enforce Written Supervisory Procedures that are designed to ensure compliance with all applicable regulatory rules and regulations. We pride ourselves on our customized Written Supervisory Procedures. Our procedures are continuously reviewed by the SEC, FINRA and state regulatory agencies and are updated to reflect changes in rules and regulations.

As part of our broker-dealer ongoing compliance support program we provide updates to address changes to applicable FINRA, SEC, MSRB, and state rules and regulations. See our separate section on new Written Supervisory Procedures for a more comprehensive review.