SEC and FINRA Compliance

Financial compliance for broker-dealer firms is as crucial as the trades themselves. Firms must take precautions and establish effective methods to stay compliant with the latest regulations since a bad audit or fine can not only blemish a reputation, but also cost a firm millions of dollars. Having an active communication monitoring and archiving solution plays a major role in meeting—and exceeding—the basic compliance requirements established by FINRA and the SEC.

Our FinTech products specialize in financial industry compliance, with particular expertise in FINRA and SEC regulations. Our goal is to help compliance officers do their jobs more efficiently.

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Built-in Financial Compliance policies

An employee sends company related information to their personal email account. This information could include buy lists, customer lists, firm specific documents or proprietary strategy information.
Occurs when an employee entertains a customer with dinner, drinks or an activity and possibly exceeds limits set by FINRA.
A customer is not satisfied with the execution they received on a trade or any interaction with the representative.
Pushing a product on a customer, exaggerating or omitting key facts, and overall dishonesty when communicating with a customer.
Broker trades in own account based on advanced knowledge of block orders being placed by a client or firm.
Making trade decisions for a customer based on information from contacts that are close to the company being traded.
Representatives must be able to spot red flags that signal fraudulent or terrorist activity. If there are red flags, a representative must fill out Suspicious Activity Report (SAR) and inform the compliance department.
Churning occurs when a broker enters into transactions and manages a client’s account for the purpose of generating commissions and in disregard of the client’s interests.

Occurs when a representative engages in business outside the scope of brokerage business or “sells away” (private securities transaction not at firm). All outside business must be disclosed on U4 to firm.

All outside accounts have to be disclosed prior to employment and new ones must be disclosed when opened.

Regulators bar registered representatives engaging in loans where a client is the other party unless it is specifically allowed in the WSPs and the firm consents to the arrangement.

Sending details for customers to personal email or outside email before leaving a firm.

Financial Regulations Covered

  • SEC 17a-4: Electronic Storage of Broker-Dealer Records

  • SEC Regulation S-P: Privacy of Consumer Financial Information

  • NASD 3010: Supervision
  • FINRA 2010: Standards of Commercial Honor and Principles of Trade
  • FINRA 2020: Use of Manipulative, Deceptive or Other Fraudulent Devices
  • FINRA Rule 2210: Communications with the Public
  • FINRA Rule 2120: Commissions, Mark Ups, and Charges
  • FINRA 3130: Annual Certification of Compliance and Supervisory Processes
  • FINRA Rule 3220: Influencing or Rewarding Employees of Others
  • FINRA 3240: Borrowing or Lending From Customers
  • FINRA 3270:Outside Business Activities of Registered Persons
  • FINRA 3310: Anti-Money Laundering Compliance Program
  • FINRA 4510: Books, Records and Reports
  • FINRA 4530(a)(1)(B): Reporting Requirements
  • FINRA Rule 5270: Front Running
  • FINRA 2111: Suitability

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