Navigating Broker Dealer Compliance Regulations

Broker dealers are required to follow federal and state laws and be aware of regulator priorities; this includes the Regulatory and Examination Priorities. Financial consultants are able to assist broker dealers by offering ongoing compliance support with on-site visits. Here is more information about navigating broker dealer compliance regulations: 

Applying for FINRA Membership

Financial partners assist firms applying for new or continuing Financial Industry Regulatory Authority (FINRA) membership. This includes creating a comprehensive business plan and connecting with auditors and legal counsel. A financial consultant is able to help with editing and preparing the required documents for the application, such as the New Member Assessment Report and the FINRA Entitlement Program Agreement. FINRA members who make a larger change to how the firm operates are required to fill out a Continuing Member application; this includes filing the 14 standard 1017 application.

Managing Files and Communications

A financial consultant helps with file organization, and they assist the broker dealer with creating and monitoring files according to internal policies and industry rules. This includes files such as: 

• FINRA Files: These include membership agreements, customer complaints, and Form BD.
• Registered Representative Files: These include fingerprint cards, pre-dispute arbitration forms, and Form U4.

Having the documents clearly organized can make them easier to find for an audit or utilize while filing paperwork. Communications between a firm and the public may be subject to compliance regulations. This includes emails and other written correspondence, advertisements, and social media posts. A consultant is able to guide a broker’s communication with the public; they also review any sample documentation and support the staff in creating compliant posts. 

Completing Regulation Filing

Broker dealer compliance includes filing the required electronic forms. A financial consultant is able to act as a Web Central Registration Depository Administrator or help the person assigned by the firm to file forms and perform in an advisory role. Required forms can include: 

• U4
• BR
• BD
• U5 

A Web Central Registration Depository Administrator helps the firm follow the Central Registration Depository requirements; they do this by monitoring regulatory training and providing advice. They also assist the broker with facilitating exams and fingerprint cards. Other requirements include performing quarterly reviews of the FINRA contact system and WEB Central Registration Depositatory.

Working With Chief Compliance Officers

A Chief Compliance Officer makes sure that a firm is maintaining regulatory compliance; they oversee the broker dealer’s compliance program. A financial consulting company is able to offer a FINRA Series 24 compliance officer. A Chief Compliance Officer provides approval for and monitors outside business activities and brokerage accounts to make sure they are following regulations. They also offer supervisory control procedures, creating the Annual Supervisory Controls report and providing 3120 testing. They also assist with regulatory examinations by communicating with the regulators. 

Following Capital and Registration Requirements

Under FINRA requirements, a broker dealer is expected to comply with the Net Capital rule. Net capital refers to the computation of a firm’s liquidity, and this figure is required to always be current and accurate. A consulting firm is able to offer the services of a Financial and Operations Principal to help the firm follow the Net Capital rule and make sure the firm maintains sufficient capital. Requirements include submitting the net capital computation and related financial information to regulators. 

With FINRA Rule 1230(b)(6), staff personnel assisting in back-office responsibilities are required to pass a qualifying exam; they also may need to be registered as Operations Professionals with FINRA. This includes supervisors who authorize other individuals’ work and senior management who are responsible for back-office tasks. Staff performing clerical work may only be required to submit fingerprints and operate as Non-Registered members. A Financial and Operations Principal helps make sure that staff members are correctly registered.

Learn More About Broker Dealer Compliance

Understanding current compliance requirements allows the broker dealer to fulfill FINRA membership rules and other regulatory laws. Working with registered financial officers simplifies the process of maintaining compliance in the broker dealer firm. A financial partner is able to review the firm’s business operations annually and suggest adjustments as needed; they also assist with CEO certifications and review the firm’s manuals. To learn more about broker dealer compliance, look for a financial consultant today.