MEMBERSHIP
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ADVERTISING REVIEW
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Read on to learn more details about our services...
MEMBERSHIPThe first consideration in seeking to establish a broker-dealer is whether forming an independent broker-dealer is the right choice. BDadvisor will assist you in exploring the options from purchasing an existing entity to joining another firm that matches the product / service mix of your existing business.
If a decision is made to purchase or join another firm, BDadvisor can provide the following services:
- Preparation of a request for Information (RFI)
- Review of candidates
- Preparation of agreements
- Regulatory notification services
- Establish the cost and fees of initial registration
- Choose the appropriate entity
- Determine required principal registrations
- Determine net capital requirements
- Choose a clearing firm
- Application preparation
- Representation and contact with regulators
- Provide registered principal services during the development period
- Registration and principal requirements
- Impact and changes on supervisory procedures
- Form BD updates and Rule 1017 applications for business or changes of control
REGISTRATION AND LICENSING
One of the most burdensome requirements of brokerage firm administration is the registration and licensing function. Not only is there a required annual renewal of each registered representative in all states and SROs but each change in registration status, address, and outside activity requires an immediate update. A successful administrator needs to be knowledgeable and current in the filing requirements of all states and SROs. In addition, DRP information is required to be reported timely and accurately to avoid regulatory scrutiny and at the same time avoid unfair characterizations on a representative’s U-4 or U-5.
At BDadvisor our professionals understand the process and will assist you with questions relating to your filing requirements and disclosures and even make timely filings on your behalf.
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SUPERVISORY PROCEDURES
The development and implementation of the written supervisory procedures for a brokerage firm can often make or break the firm’s chances for prevailing in an arbitration, civil dispute or regulatory action.
Frequently firms adopt “form procedures” that do not relate to their business practices, products or services with the result the procedures address lines of business and processes for activities in which the firm does not engage or are inadequate for the business conducted by the broker-dealer. In addition, these form procedures may be overly burdensome with the result that they are not followed by the field force.
BDadvisor will customize the written supervisory procedures to fit your business activity after thoroughly reviewing your existing supervisory structure. We will ensure that the firm’s WSPs complement all existing branch procedures and representative manuals.
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REGULATORY REPORTING
All broker-dealers are required to make routine reports relating to financial performance and number of complaints received to their SRO. The accuracy and timeliness of these reports have increasingly become a focus of regulatory examinations.
Financials
To conduct a securities business all broker-dealers are required to maintain minimum net capital requirements at all times. The monthly and quarterly focus filings provide regulators with a snap shot of a firm’s net capital position and its financial trend over time.
Our FINOP Services Program is designed to ensure that your broker-dealer maintains sufficient net capital that is accurately computed and filed on a timely basis. BDadvisor will provide support as needed with answers to your questions, information on rule changes and interpretations.
3070 Complaint and Event Reporting
Rule 3070 requires that certain defined events relating to allegations, claims and settlements be reported to FINRA. These events are frequently subject to interpretation as to whether the matter is subject to reporting.
This same rule requires that member firms file a quarterly statistical summary of all complaints received by the broker-dealer. However, as with the event filings, some “grievances” may not be reportable as complaints under the rule’s guidelines and interpretations.
The reverse is also true. Some events or customer grievances may be reportable under the rule but may not appear to require reporting.
BDadvisor provides assistance in event reporting and quarterly statistical complaint reporting. Our professional staff will analyze the event or grievance under the existing interpretations and guidelines and recommend the reporting status of an event or complaint.
Form BD Updates
A broker-dealer’s Form BD is required to be currently maintained. BDadvisor will review all major events impacting the firm including settlements, litigation, new lines of business and officer changes and make recommendations for Form BD updates.
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SURVEILLANCE SYSTEMS
An effective surveillance system is a major tool for fulfilling the firm’s obligation to effectively supervise transactions that are being processed through the broker-dealer. Even small firms are expected to have automated review systems to flag questionable transactions that may result in suitability challenges.
Broker-Dealers need to be aware of the surveillance capabilities provided by their clearing firms and have a system to address their direct business transactions as well.
Our technology group will improve your existing surveillance processes or develop new surveillance systems and techniques that are effective and cost- efficient.
BDadvisor provides the following assistance for improving surveillance capabilities:
- Test the existing system
- Identify (and customize) available reports that are not being used
- Create surveillance reports for direct business using existing platform
- Update procedures to incorporate new reports and techniques
ADVERTISING REVIEW SERVICES
Weaknesses in the advertising review function pose a special problem for a broker-dealer. Advertising compliance deficiencies that do not comport with the rules are publicly disseminated. The more an advertising piece is publicly noticed (i.e. the more successful the advertisement) the more discoverable the potential deficiencies especially by the firm’s competitors who account for the vast majority of advertising complaints and investigations.
The unique challenge of advertising compliance is to preserve the effectiveness of the advertising piece within the scope of the securities advertising rules. BDadvisor works to keep the message strong and stay within the rules. We do not merely point out the deficiencies but we provide proactive guidance for changing the piece to meet the advertising guidelines.
Our advertising compliance review services provide current expertise in the following advertising mediums:
In addition, our group of professionals realizes the value of timely reviews for advertising material and we strive to provide turnaround with revisions within 48 hours from the time of submission.
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TRAINING AND CONTINUING EDUCATION
Most routine deficiencies and rule violations do not result from willful transgressions of the securities rules, but from a lack of knowledge of products, rules and best practices. Training is the essential ingredient for creating what is referred to in recent regulatory dictums as the “culture of compliance”.
Our group of professionals understands that training is much easier and effective if it is INTERESTING especially if the training is REQUIRED. To that end we design and deliver INTERESTING training programs for the following events:
Firm Element and Continuing Education Programs
To implement effective firm element programs it is necessary to consider the firm’s weaknesses and the product mix that is being delivered with a complete needs analysis. We design or identify appropriate courses that fit your needs.
Annual Compliance Conferences
Our professional staff can deliver annual compliance conferences to groups or on a one-on-one basis during the audit process.
Branch Managers Meetings
While not a requirement, Branch Manager meetings (training for Managers) provide a very effective training tool because of the Branch Manager’s position as a leader and mentor of his or her group.
Specialized Training Programs
Specialized training programs are becoming a remedy for addressing sales practice weaknesses that arise during the course of a regulatory examination or through customer complaints.
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AUDITING
Auditing continues to be the ultimate method for testing the effectiveness of a broker-dealer’s supervisory structure and recordkeeping system for each firm activity at every firm location from the Main Office to unregistered locations.
BDadvisor provides the following auditing services:
Main Office
- "Pre-Regulatory (“mock”) audits of all areas
- FINRA Rules 3010 and 3012 Reviews of Supervisory Structure
The BDadvisor auditing staff consists of experienced professionals that perform thorough compliance and/or financial audits utilizing our own electronic auditing tools and/or forms and procedures provided by our clients. Our auditing network is nationwide allowing us to provide services at a reasonable cost at virtually any U.S. location. Our typical branch auditing program includes but is not limited to the following services:
- Interview of branch personnel
- Review of books and records
- Review of financials
- Sales practices review
- Annual compliance meetings
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OTHER SERVICES
Litigation Research and Expert Testimony
BDadvisor works with attorneys to provide research and expert testimony for civil litigation and arbitration matters.
Anti-Money Laundering Programs
Since the passage of the USA PATRIOT Act, AML programs have become a very significant part of a strong compliance program and an area that is highlighted in most regulatory examinations. Moreover, any resulting publicly disseminated violations in this area can have a very adverse impact on the reputation of a financial institution.
Our experienced AML professionals will review and audit your existing program and procedures for compliance with the USA PATRIOT Act, the U.S. Treasury Department Rules and MSRB Rule G-41.
Responses to Examination Deficiencies and Regulatory Inquiries
Occasionally a firm is required to provide information and documentation during or following a regulatory investigation or routine examination. The experienced staff of BDadvisor can provide assistance to your internal staff and /or legal counsel in responding to regulatory information requests and inquiries.
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