FINRA Supervision Rules: What You Need to Know in 2015
Overview:In this two-hour LIVE webcast, a panel of distinguished professionals and thought leaders will help broker/dealers and financial advisors implement the new FINRA rules. They will discuss important new provisions of the new FINRA consolidated supervision rules and discuss best practices.
Key topics include:
- Supervision (New FINRA Rules 3110)
- Supervisory Control System (New FINRA Rules 3120)
- Holding Customer Mail (New FINRA Rules 3150 )
- Tape Recording of Registered Persons by Certain Firms (New FINRA Rules 3170)
And a lot more!
Associate Vice President and Associate General Counsel
Financial Industry Regulatory Authority, Inc.
Lawrence P. Stadulis
Stradley Ronon Stevens & Young, LLP
Merrill R. Steiner
Stradley Ronon Stevens & Young, LLP
- This presentation covers the extensive new FINRA consolidated supervision rules, which replace or change the former related NASD supervision rules.
- The new FINRA Rules are effective on December 1, 2014.
- Consequently, members should, by that date, be aware of the extensive nature of the new FINRA rules and should incorporate the changes in their written supervisory procedures, designate principals and representatives, and implement their procedures as changed.
- New Consolidated Supervision Rule. The new supervision rule (3110) continues to require a supervisory system “reasonably designed” to achieve compliance with securities laws and regulations, with the following changes, among others:
- Supervision in Each Office. Each OSJ must have an “on-site principal” with a regular and routine physical presence at the OSJ, with a new general presumption that a single principal may not be designated for more than one OSJ.
- Scheduled Inspections of Locations. A new presumption is imposed that a non-branch location will be inspected at least every three years, and if the period is longer than that, the member must document the factors used to support the longer period.
- Preventing Compromise of Office Inspections. Less prescriptive requirements are imposed to prevent office inspections from being compromised by conflicts of interest and, in most cases, an associated person may not conduct a location’s inspection where either assigned to the location or directly or indirectly supervised by, or reporting to, a person assigned to the location.
- Written Review of All Transactions. For the currently required written review of all transactions relating to the member’s investment banking or securities business, the member may now use a reasonably designed risk-based review system that permits focus on the greatest risk areas for violations.
- Review of Communications With the Public. New procedures call for review of internal communications with a subject matter that may impact compliance with laws and rules and for undertaking risk-based reviews of whether other additional types of communications should be subject to review, with new documentation and delegations.
- Review and Investigation of Potential Insider Trading. New supervisory procedures must call for review and investigation of potential insider trading, based on review of transactions effected for the member, its associated persons (personal or controlled accounts) at the member’s, or a disclosed member’s location, or certain family members of associated persons, to identify potential insider trading or other manipulative or deceptive devices.
- Preventing Compromise of Supervision. New supervisory procedures must prohibit associated persons from supervising their own activities or reporting to, or having their compensation or continued employment determined by, a person they are supervising and must require policies and procedures to prevent conflicts of interest between the supervisor and supervised person that may compromise the supervisory system.
- Supervisory Control System. The new rule (3120) keeps the requirement to designate and identify to FINRA one or more principals to maintain and enforce, through testing and verification, a supervisory control system designed for the activities of the member and its associated persons, with the following change:
- For members with more than $200 million in gross annual revenues, the annual report to senior management must include, where applicable, a listing of reports for the year to FINRA of customer complaints and internal investigations, and a description of the prior year’s compliance efforts, including procedures and educational programs relating to certain operating areas, practices and supervision.
- Holding of Customer Mail. The new rule (3150) continues to permit a member to hold customer’s mail for up to three months if the customer will not receive mail at the usual address, where certain conditions are met, with the change that customers may request a longer holding period, provided the customer and member meet several conditions.
- Tape Recording of Registered Persons by Certain Firms. The new rule (3170) keeps the previous requirements without any substantive changes, but
- includes a definition clarifying the term “tape recording” and requires a member that is notified by FINRA, or otherwise has actual knowledge, that it is a “taping firm” (based on how many of its “registered persons” were associated with a “disciplined firm” during the past 3 years) to have and enforce special written procedures for supervising the telemarketing activities of all of its registered persons, including procedures for tape recording and reviewing all telephone conversations.
- To assist firms in complying with this new rule, FINRA provides a “Disciplined Firms List” identifying those firms that meet the definition of “disciplined firm.”
Clouse Dunn LLP
Understanding and Preparing for a Successful OTR (On the Record Interview)
At some time in their career, most Financial Advisors will have to give FINRA an OTR (on the record interview). An unsuccessful OTR can have disastrous consequences, including censure, fine and permanent suspension of all FINRA licenses.
This presentation explains why FINRA pursues OTRs, Financial Advisor’s rights and obligations when FINRA requests an OTR, and how to prepare for an OTR to protect your reputation and avoid a fine, censure and/or license suspension.
At an OTR a Financial Advisor must answer any questions asked by a FINRA investigator and/or attorney and produce documents. The OTR is taken under oath and, like a deposition, a court report makes a permanent stenographic record.
An OTR can involve your conduct or the conduct of the wirehouse/investment bank where you work, the conduct other Financial Advisors, analysts, actuaries of the wirehouse/investment bank where you work or an insurance company whose financial products you sell.
Who Should Attend:
- In-house Attorneys
- Outside Law Firms that advise on FINRA regulatory matters
- Regulatory and Policy Managers
- Finance Planners and Executives
- Financial Analysts
- Related Finance Executives
- Other related/interested professionals and organizations
Kosha Dalal is Associate Vice President and Associate General Counsel with FINRA’s Office of General Counsel. In this role, she provides legal guidance on various policy initiatives and rule changes/interpretations including, supervision, non-cash compensation, branch office, customer account statements, payments to unregistered persons and corporate actions. She has been with FINRA’s Office of General Counsel since 2000. Ms. Dalal also serves on FINRA’s Diversity Leadership Council. Prior to coming to FINRA, she was an associate with the law firm of Venable in Baltimore, MD, Kalkines Zall in New York, NY and Skaden Arps in New York, NY. Ms. Dalal attended Columbia University in New York, NY where she received a bachelor’s degree in political science and economics. She received her law degree from Brooklyn Law School.
Kosha Dalal is Associate Vice President and Associate General Counsel with FINRA’s Office of General Counsel. In this role, she …
Lawrence Stadulis is a partner in the Washington, D.C., office of Stradley Ronon, where he heads the firm’s Broker-Dealer Regulatory Practice and is a member of the firm’s Investment Management/Mutual Funds Practice Group. Mr. Stadulis advises clients in matters pertaining to the registration and regulation of broker-dealers, investment advisers and investment companies under federal and state securities laws and FINRA regulations. He handles a broad range of broker-dealer regulatory matters, including membership and continuing FINRA membership applications, written supervisory procedures and supervisory issues, advertising and marketing issues, periodic reporting and regulatory examinations issues. Mr. Stadulis is a frequent lecturer and author on legal matters pertaining to the broker-dealer and investment management industries. Before Stradley Ronon, Mr. Stadulis was a partner at another law firm, and before that, special counsel in the Office of Chief Counsel, Division of Investment Management, U.S. Securities and Exchange Commission.
Lawrence Stadulis is a partner in the Washington, D.C., office of Stradley Ronon, where he heads the firm’s Broker-Dealer Regulatory …
Merrill Steiner is a partner in the Philadelphia office of Stradley Ronon and member of the firm’s Investment Management/Mutual Funds Practice Group. Mr. Steiner focuses his practice on federal and state securities law, advising registered and private investment companies, investment advisers, broker-dealers and commodity trading advisors, as well as other corporations and businesses. His practice includes providing advice regarding compliance with regulations of federal and state securities and commodities regulatory authorities and self-regulatory organizations such as the New York Stock Exchange, the Financial Industry Regulatory Authority (FINRA, formerly NASD) and the National Futures Association.
Merrill Steiner is a partner in the Philadelphia office of Stradley Ronon and member of the firm’s Investment Management/Mutual Funds …
Rogge Dunn is a trial attorney and counselor for Fortune 500 companies, wirehouses and prominent Financial Advisors, executives and entrepreneurs. Dunn has developed a specialty involving significant matters in the financial industry. This includes regulatory issues, wrongful discharge, moving teams, non-competes, the Protocol for Broker Recruiting, promissory note defense and forfeiture of deferred compensation. He obtained the largest wrongful discharge arbitration award against Goldman Sachs for an FA in California. Dunn has represented a number of FAs who have given FINRA on the record statements.
Dunn has won more than $2 billion in judgments and settlements for his clients. He has represented more than 10 FAs in Barron’s top 100 financial advisors nationwide. Dunn has won million dollar jury verdicts or arbitration awards in California, Texas, Louisiana and Arkansas.
Rogge Dunn is a trial attorney and counselor for Fortune 500 companies, wirehouses and prominent Financial Advisors, executives and entrepreneurs. …
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About Stradley Ronon Stevens & Young, LLP
Counseling clients since 1926, Stradley Ronon has helped private and public companies – from small businesses to Fortune 500 corporations – achieve their goals by providing pragmatic, value-driven legal counsel. With seven offices throughout the mid-Atlantic region, our responsive team of more than 200 attorneys seamlessly addresses the full spectrum of our clients’ needs, ranging from sophisticated corporate transactions to complex commercial litigation. Stradley Ronon is nationally recognized for having one of the premier investment management practices in the United States, representing investment company clients with more than 1,000 separate mutual funds and assets under management approaching $2 trillion. Our investment management lawyers have substantial experience representing registered broker-dealers, including handling all aspects of initial formation and registration and interfacing with the SEC, FINRA and the IRS on broker-dealer matters.
About Clouse Dunn LLP
Clouse Dunn was founded by Rogge Dunn in 2002. The Firm handles business and employment law matters for Fortune 500 companies and executives, entrepreneurs and employees. The Firm has handled lawsuits, arbitrations and FINRA matters across the country. The Firm has been recognized as a top law firm in Texas and its Board Certified attorneys have been repeatedly honored as among the top 100 lawyers in Texas and top lawyers in Dallas by Texas Monthly and D Magazine.