Broker Dealer Assessment/Internal Inspection
An internal inspection /compliance assessment is a great starting point if you’re new to working with us or simply want to gain a better understanding of where your firm stands with regard to regulatory compliance. Our experienced staff will conduct a thorough and precise inspection of your compliance program that meets the requirements for an annual inspection as required by FINRA. The inspection examines the key processes used in the administration of the compliance program by interviewing management and staff members and examining documents produced by you. While the inspection is not as detailed as a regulatory audit, it will bring to light areas of concern in your compliance program. Additional documents are examined in areas that appear to have a weakness to determine if the issue is “one-off” or if there is a systematic problem in the compliance program.
The standard areas examined by the ComplianceWorks inspection include the following:
Physical Office – does the office present a professional environment; are there issues related to shared space with non-regulated entities; is there proper signage directing persons to the broker-dealer’s office and in the lobby and other regulatory signage required?
Personnel – are all required persons licensed; are licensed individual’s U-4s up to date; do all licensed personnel and officers have written employment agreements; are there finger print records; has the broker-dealer designated all required personnel?
Previous Exams – has the broker-dealer had a recent regulatory exam and if so have all deficiency items been addressed; has the broker-dealer maintained a program of annual inspections and if so has the broker-dealer addressed any issues noted?
Client Files – are client files secure; if used, do all client files have current investment management agreements or subscription documentation; do client files contain all supporting documentation; is there correspondence in client files and if so has it been supervised; are there any irregularities in the files?
New Accounts – what is the process for opening new accounts and are all signoffs present; is the New Account Form up to date and completely filled out; has client information been updated?
Transactions – are all transactions completely documented and evidenced with review; are transactions appropriate; are commissions and fees reasonable; is the blotter complete and reviewed; is all supporting documentation present?
Checks and Securities – is a log kept and are all checks and securities properly and expediently handled; as applicable are all custodial records complete?
Public Communication – does the broker-dealer have adequate procedures to govern the review of correspondence (written and electronic), advertising, cold calling and for holding mail; has advertising been submitted to FINRA as required?
Complaints – does the broker-dealer have adequate procedures for handling complaints; have complaints been promptly addressed and reported as required?
Outside Activity – have all the registered representatives reported and updated outside activity; has the activity been reported on the representatives U-4?
Personal Investments – has the broker-dealer requested and tracked registered personnel’s personal brokerage investment accounts; are there procedures for violations of personal trading?
Training – has the broker-dealer conducted the required training for firm element; does the broker-dealer track regulatory element requirements; is the annual compliance meeting agenda sufficient?
Anti-Money Laundering – does the broker-dealer have a sufficient anti-money laundering program; has the program been independently tested; has the broker-dealer conducted AML training?
Books and Records – has the broker-dealer maintained its compliance manual has and written procedures on personal trading, correspondence, advertising, business continuity and inside information; maintains all required organizational records; created, review and update business continuity plan; maintain SIPC membership; maintains all agreements with third parties including clearing agreements; conducts annual GAP analysis in support of the CEO Certification?
Municipal Securities – as applicable, does the broker-dealer maintain all required documentation and conduct required reporting for municipal securities?
ComplianceWorks may customize the inspection at the client’s request. Upon completion of the onsite inspection, ComplianceWorks staff provides an exit conference to discuss findings and provide an opportunity for broker-dealer clients to provide further input. All clients are provided a full written report (electronic or hard copy) for all inspections performed. As requested, ComplianceWorks staff will work with the broker-dealer on solutions to issues and amend its compliance program to enhance the firm’s compliance program.