Broker Dealer - Written Supervisory Procedures

Written Procedures (Model)

SCA provides a broad range of compliance and regulatory services to the broker dealer community. SCA’s clients have found that outsourcing certain aspects of the compliance function is a cost effective strategy that provides access to qualified experts when needed.

SCA’s model procedures include specific manuals for each of the following:

• Written Supervisory Policies and Procedures;
• Written Supervisory Control Policies and Procedures for NASD Rules 3012 and FINRA Rule 3013; and
• Policies and Procedures for Registered Representatives.

SCA’s model procedures are designed to provide guidance to firms that are developing new procedures or modifying existing procedures. Firms should not adopt “off the shelf” procedures without substantial modifications to conform to their business activities and operations.

Written Procedures (Customized)

SCA staff will customize the Model Policies and Procedures to meet the specific needs of each client. SCA can also review and update your current supervisory and compliance procedures.

Regulator Expectations

NASD Rule 3012 and FINRA Rule 3130, along with amended NASD Rule 3010, set forth the current requirements for a supervisory system:

• FINRA Rule 3130 requires firms’ CEOs to certify that their firms have a process to adopt adequate Supervisory Policies and Procedures;
• NASD Rule 3010 requires firms to establish supervisory systems and implement adequate written supervisory policies and procedures; and
• NASD Rule 3012 requires firms to test and verify supervisory procedures and, if necessary, to amend policies and procedures.
  

Minimum requirements for a Supervisory System and Procedures requirements include:

• Written Supervisory Procedures reasonably designed to achieve compliance with all applicable laws and regulations;
• Designating Qualifications of Principals Responsible for Supervision;
• Designating Offices of Supervisory Jurisdiction;
• Annual Compliance Meeting;
• Review of Supervisory Procedures on a regular basis; and
• Annual Inspection.
  

More detail on FINRA expectations regarding supervisory procedures may be found in the FINRA Written Supervisory Procedures Review Checklist. Although this list is not to be considered a “safe harbor” or all inclusive, the list does provide guidance on what areas FINRA examiners are currently reviewing.