Avoid Regulatory Action with Broker-Dealer Compliance Software
Avoid Regulatory Action with Broker-Dealer Compliance Software

Our team conducts comprehensive reviews of broker-dealer equity trading desks intended to emulate the TFCE performed by FINRA’s Market Regulation Department. Our broker-dealer division can help implement sound compliance and supervisory programs that address appropriate FINRA and Securities and Exchange Commission regulations. Our consultants have years of regulatory experience, professional designations, and Certified Anti-Money Laundering Specialists Certifications. Vigilant will help your firm develop and implement a strong broker-dealer compliance program that assures your culture is one that respects the law.

With consolidated dashboards, customizable workflows and user profiles designed for your business model, you have a bird’s eye view of your firm’s compliance program. Regulators are increasingly leveraging technology to identify violations. However, point solutions for such monitoring often create data siloes that negatively impact the efficiency and effectiveness of your compliance program.

Large fines have been handed out for breaches, so efficient data monitoring, surveillance, and reporting are vital. However, the growing number of data feeds and sources make compliance officers’ jobs increasingly difficult. Training – Broker dealers must conduct an annual compliance meeting and provide relevant compliance training to its staff annually. Annual Audit – Broker dealers must have their financials audited by a PCAOB registered, independent auditor each year.

Data is normalized, mapped, and indexed, so it’s readily searchable and retrievable. We steer clients through the extensive, multistep process of applying for FINRA membership, including preparing your application, ensuring you have completed all required qualifications and examinations for the business as well as individuals as necessary. We ensure our clients have the correct documents at all times in order to facilitate compliance with the various applicable laws, regulations and standards.

What are the current cash versus non-cash compensation rules, and what can and cannot be paid for? How should suitability and legitimate concerns be evaluated before a new product is made available? You should consider seeking advice from FINRA what is compliance for brokers arbitration law firm/ hiring an attorney to represent you during the arbitration or mediation proceedings to provide direction and advice. Even if you do not choose to hire an attorney, brokerage firms are generally represented by an attorney.


Once you submit your application to FINRA, FINRA must review and process your application within 180 days. It may take a substantial amount of time to accumulate and organize all information required as part of the application process. These solutions automatically track and maintain reporting requirements, issue deadline and compliance reminders, and monitor employee trading accounts. This checklist helps firms evaluate their Reg BI and Form CRS compliance programs and notes key differences between FINRA rules and Reg BI and Form CRS.

Look at all your LOBs and determine whether they interact with retail investors or retail customers . Review RR compensation and bonus structure and programs to determine conflicts that require disclosure and/or elimination. WilmerHale has a record of success at all stages of enforcement proceedings—from informal inquiries to litigation. Finally, it is up to the buyer to determine what is or isn’t a “clean” BD and not the seller. Purchasers must conduct thorough and complete due diligence on any BD they purchase.

Drafting Policy Requirements

To prevent physical assets from being stolen, advisors must implement controls and better procedures and educate customers on keeping their assets safe. Adopting a systematic approach to compliance, digitalizing records, maintaining policies, and managing evidence to meet any audit requirements, providing full disclosure of material facts to clients – all can ensure compliance. Failure to obtain client’s consent for transactions and collect the required securities disclosure reports can result in regulatory action. Pursue the appropriate business licenses for your local and state governing bodies. Then, consider pursuing memberships to the various required regulatory bodies like FINRA and the SEC. The fidelity bond acts as an insurance policy in excess of the firm's net capital requirement.

Building a broker-dealer compliance program

Legacy systems, data silos, and manual processes are key issues in broker-dealer compliance. Compliance teams are struggling to manage disparate data from various sources - some no longer supported by certain systems. To ensure your record-keeping is compliant and auditable, SteelEye consolidates your data under a single lens.

Form CRS

These tools, resources and guidelines help firms satisfy the requirements of FINRA Rule use the BrokerCheck logo. This template helps small firms with fulfilling their obligations under FINRA Rule 4370 . The SEC amended Rule 17a-4 on October 12, 2022 to modify the requirements regarding the maintenance and preservation of electronic records, the use of third-party recordkeeping services to hold records, and the prompt production of records.

  • Obtain and update retail customer investor profile by June 30 so RRs can make the client-suitability assessment.
  • This includes issuers that purchase their securities from investors, as well as issuers that effectively operate markets in their own securities or in securities whose features or terms can change or be altered.
  • Issuers generally are not "brokers" because they sell securities for their own accounts and not for the accounts of others.
  • Once you submit your application to FINRA, FINRA must review and process your application within 180 days.
  • We have successfully obtained regulatory relief for broker-dealer clients, including SEC no-action and interpretive letters and exemptions, on a wide variety of issues.

Our team of regulatory experts helps fulfill compliance requirements or alleviate specific program challenges that help you increase operational efficiency, reduce total cost of ownership and mitigate risk. Even if the BD is approved for the product lines that the purchaser wishes to engage in, the purchaser still may not be able to engage in that business during the application process. If the business is materially different in the method of solicitation, execution, reporting or a material increase in the existing volume, then FINRA may require that the purchaser wait until the application is approved prior to engaging in the business.

C. Trading by Members of Exchanges, Brokers and Dealers (Section 11(a))

As such, when deciding to register as a broker-dealer, it is important to plan for the time required for processing Federal, state, and SRO registration or membership applications. The U.S. Department of the Treasury's Financial Crimes Enforcement Network and the Bank Secrecy Act require broker-dealers to file SARs for transactions that they suspect involve fraud or lack an apparent lawful business purpose. Generally speaking, a SAR is a standard form document used by broker-dealers and other financial institutions to report suspicious or otherwise out-of-the-ordinary conduct. SARs can aid in the detection and analysis of questionable financial trends and patterns and, as a result, often provide information that can help law enforcement agencies uncover and prevent money laundering, criminal financial schemes and other illegal activity. CSS can also build a customized compliance program for managing cryptocurrency assets to meet the growing investor demand in this space.

Organizations across industries trust VComply to establish and manage their compliance programs. SEC Form 17-H is a risk-assessment report that all large broker-dealers must file with https://xcritical.com/ the Securities and Exchange Commission. This account must be separate from any personal accounts, though you may deposit initial investment capital from your personal wealth.

D. Use of Electronic Media by Broker-Dealers

These clearing agents ensure trades settle appropriately and transactions are successful. You must obtain the required licenses from both your local and state regulatory bodies. If you've decided to acquire an existing broker-dealer firm, many of these requirements will already have been satisfied. Review past versions of the FINRA Weekly Update and check out our other email subscriptions, including notifications of regulatory information and updates, including new speeches, news releases, announcements and publications.

Cyber security is becoming an increasing focal point for the SEC and all global regulators. Our team assists organisations that carry out business as futures professionals with registration and ongoing Commodity Futures Trading Commission compliance obligations. Business Services Expert provider of complex administrative solutions for capital events globally. Our services include claims and noticing administration, debt restructuring and liability management services, agency and trustee services and more. Expert provider of complex administrative solutions for capital events globally.

Packaged compliance solutions for broker-dealers

This checklist helps small firms with the CAT onboarding process and provides deadlines and additional resources. This voluntary model brokerage account form helps firms evaluate and update their new account forms. This job aid helps firms determine the annual renewal fees charged per registered individual as listed on the Renewals – Firm Renewal Report and Download. This checklist helps small firms establish and evaluate their data protection policies and controls. 12 When a broker-dealer is a member of more than one SRO, the SEC designates the SRO responsible for examining such broker-dealer for compliance with financial responsibility rules (the "designated examining authority"). 11 Rules 17a-2, 17a-7, 17a-8, 17a-10 and 17a-13 contain additional recordkeeping and reporting requirements that apply to broker-dealers.

Building a broker-dealer compliance program

As your business grows, CSS is there to help you scale, whether adding new financial professionals or services to managing an enterprise. Compliance policies and procedures must describe what RRs need to do to discharge their care, disclosure and conflict of interest obligations. Written supervisory procedures need to be developed for relevant supervisors responsible for the firm’s compliance with Reg BI and CRS. Relevant committees whose mandates relate to Reg BI should also have updated policies and procedures.

This table helps firms determine whether they must file a Form CMA or engage in a materiality consultation pursuant to FINRA Rule 1017. Monthly account statements showing the market value of each penny stock held in the customer’s account. Rule 104 of Regulation M governs stabilization transactions, syndicate short covering activity, and penalty bids. Rule 103 of Regulation M governs passive market making by broker-dealers participating in an offering of a Nasdaq security. Effecting transactions in securities sold to "qualified institutional buyers."

MAH Advising LLC, ranked as a top 10 legal and compliance firm by financial services review magazine, is a pioneer in protecting your financial services firm from legal and regulatory risk. WilmerHale’s Investment Management Group provides sophisticated legal and regulatory advice to investment advisers, private fund sponsors, registered funds, and their independent trustees. It is important to note that anyone who is purchasing a BD must be VERY wary of anyone who claims to have a “shell” or a “clean” BD. The truth is that FINRA does not permit its members to exist in a “shell” state.

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