Supervisory Controls Requirement (FINRA Rule 3120)
Broker dealers are required to test and verify annually that there supervisory procedures are reasonably designed to achieve compliance with applicable securities laws and regulations and with applicable FINRA and MSRB Rules. In addition, a report is required to be submitted to senior management annually detailing the firm’s supervisory control system, a summary of the test results, significant identified exceptions and procedures created in response to the test results.
SCA consultants have assisted clients with diverse business lines in fulfilling their supervisory controls reviews since the rule went into effect over ten years ago. We provide the following supervisory control services which are customized to meet the needs of each client:
- Conduct a “gap analysis” of firms' current supervisory procedures by assessing whether their procedures adequately address all applicable rules, regulations and internal policies and controls for each business activity
- Conduct a risk assessment of the Firm’s business
- Develop a risk-based verification and testing plan to assess the adequacy of the client’s supervisory procedures;
- Conduct testing of the effectiveness of the compliance program
- Report testing results to appropriate members of senior management
- Develop new or modified procedures where material gaps in the current procedures exist and/or in response to the results of the testing
SCA will work with the client to determine the scope of our services in connection with this requirement.