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Guide to Broker-Dealer Registration

Securities and Exchange Commission as a “small entity compliance guide” under Section 212 of the Small Business Regulatory Enforcement Fairness Act of 1996, as amended. The guide summarizes and explains rules adopted by the SEC, but is not a substitute for any rule itself. Only the rule itself can provide complete and definitive information regarding its requirements. This tool helps small firms enhance their customer information protection, and cybersecurity WSPs and related controls by highlighting common categories of cybersecurity threats; providing a summary of core controls; and listing relevant terms and additional resources. FINRA Topic Pages – Overview of guidance and compliance resources for all member firms on relevant regulatory obligations. Nevertheless, the regulatory disruption wrought by the Panama Papers scandal and the Malaysian 1MDB theft has created the need for a high-tech AML response.

Building a broker-dealer compliance program

Unfortunately, a single misstep can disrupt your shipment and lead to costly penalties. From classifying your goods to paying the necessary duties and taxes, a licensed customs broker will make sure you comply with all required regulations. Helping you to detect and prevent market abuses that could jeopardize your reputation and regulatory compliance. 9 Exemptions from the requirements of Exchange Act Rules 15g-2 through 15g-6 are provided for non-recommended transactions, broker-dealers doing a minimal business in penny stocks, trades with institutional investors, and private placements.


Senior management is responsible for implementing the board-approved BSA/AML compliance program. If there’s a breach in your security, and some of your data is compromised, it’s best to contact your local FBI office. If you face a particularly problematic attack or breach that leaves you or your customers unable to conduct business, you can also reach out to a FINRA risk-monitoring analyst. FINRA requires you to disclose any material information you might have about investments you recommend to or discuss with investors. If you report false information or don’t report all information, you may be pegged for fraud. At Compliance Risk Concepts, we provide clients with the critical skills and expertise required to establish, maintain and enhance a balanced and effective compliance operational risk management program.

It also describes the types of brokers and dealers that do not have to register with the SEC. In such organizations, management of BSA risk is generally the responsibility of a corporate compliance function that supports and oversees the BSA/AML compliance program. We will collaborate with your leadership to understand your firm’s compliance goals as well as the policies and procedures that support them. Our experts in process management and compliance provide a road map prioritizing areas of your program that could benefit from reframing. By changing ineffective policies, updating procedures and simplifying processes, we help your team create long-term value through thoughtful redesign.

What is Compliance for brokers

Internal audit should assess the level of compliance with the consolidated BSA/AML compliance program. Other banking organizations may adopt a structure that is less centralized but still consolidates some or all aspects of BSA/AML compliance. For example, risk assessment, internal controls (e.g., suspicious activity monitoring), independent testing, or training may be managed centrally.

Design a Risk-Based Strategy

To mitigate risk in a changing business environment, BDs must ensure their transaction-monitoring systems are flagging suspicious trades in a timely manner, with a close eye on microcap transactions and trades that deviate from the projected investment activities of their RIA accounts. While there is a clear regulatory mandate to perform testing of a firm’s policies and procedures, there is a lack of guidance on how to perform testing, and few practical tools available for BD compliance testing. We work with asset management firms throughout the world to facilitate compliance and product distribution through legal underwriting, registered rep licensing and chaperoning, and DTCC/NSCC fund sponsorship for all types of pooled investment vehicles. We can assist with a review of branch audit programs and perform branch office inspections. Our branch office inspections can be a general review to assess compliance with FINRA Rule 3110, or they can be refined to include specific focus areas. We understand that the size and nature of a broker-dealer can vary widely, from market maker, to Funding Portal (FP-BD), to upcoming Capital Acquisition Broker .

We are advising clients to make certain that applications are entirely complete and contain a complete description of the steps and procedures the company is taking to maintain compliance. Such descriptions in the application serve to anticipate concerns of Customs agents and compliance personnel, and thereby prevent the application from being pulled back to address such questions. The SEC is taking a retaliatory stance against certain BD-employee confidentiality agreements that violate Section 21F-17 of the Securities Exchange Act of 1934, which amends “Securities Whistleblower Incentives and Protection” provisions. 5 In addition, Rule 11Ac1-3 requires broker-dealers to inform their customers, upon opening a new account and annually thereafter, of their policies regarding payment for order flow and for determining where to route a customer’s order. In particular, a broker-dealer must make recommendations based on a customer’s financial situation, needs, and other security holdings.

  • In the absence of that, firms may be wary of switching from WORM to the audit trail alternative.
  • They are out of touch with the company’s business and activities and are usually never around .
  • For guidance on the key points you should consider, see the10 Steps to Choosing the Right Compliance Solution.
  • For example, a small institution may choose to combine BSA/AML compliance with other functions and utilize the same personnel in several roles.
  • Small and medium-sized broker-dealers increasingly face enforcement action for non-compliance, often costing millions of dollars.
  • The template provides text examples, instructions, relevant rules, websites and other resources that help small firms develop an AML compliance program plan.

No matter what industry you work in, files like sales contracts, marketing assets, videos, and product specs are probably all a part of your workday. This rule ensures regulators can be more accurate and efficient in keeping records of the U.S. equities and options markets. Health insurance is highly regulated and will continue to evolve, and each member of the distribution pipeline bears responsibility for following the law. In many ways, because of the nature of healthcare, the penalties for non-compliance are not solely about the dollars involved. Healthcare in America is a hot-button issue that continues to receive political focus and media attention. As affordability, privacy, and consumer protection remain major concerns, we anticipate regulation will also keep increasing.

Collections of FINRA Resources

Form BD asks questions about the background of the broker-dealer and its principals, controlling persons, and employees. The broker-dealer must meet the statutory requirements to engage in a business that involves high professional standards, and quite often includes the more rigorous responsibilities of a fiduciary. The definition of „dealer“ does not include a „trader,“ that is, a person who buys and sells securities for his or her own account, either individually or in a fiduciary capacity, but not as part of a regular business.

As a result, we take a firm’s unique characteristics into account when designing, updating, and/or implementing compliance policies and procedures. Assisted firms with cross-border trading and related products and services to address capital, margin, insolvency, broker-dealer registration and other regulatory issues. WilmerHale’s Investment Management Group provides sophisticated legal and regulatory advice to investment advisers, private fund sponsors, registered funds, and their independent trustees. Both licensed and unlicensed members of the trade community who are engaging in the above identified illegal activities must cease and desist such activity. Should you have any questions regarding these rules, please contact the Broker Management Branch. States often pass additional laws forbidding predatory lending in the form of consumer credit laws.

When this approach is taken, examiners must identify which portions of the BSA/AML compliance program are part of the consolidated BSA/AML compliance program. As discussed above, a banking organization has discretion as to how to structure and manage its BSA/AML compliance program. For example, a small institution may choose to combine BSA/AML compliance with other functions and utilize the same personnel in several roles. In such circumstances, there should still be adequate senior-level attention to BSA/AML compliance, and sufficient dedicated resources.