Increasingly Complex Regulation

RegComp assists broker dealers, including limited scope brokers and capital acquisition brokers and other financial intermediaries on regulation and compliance with federal securities and derivatives laws, state blue-sky laws, and the rules of FINRA, the NFA and other self-regulatory organizations (SROs). We offer customized, comprehensive and cost-effective services to broker-dealer owners, CCOs, FINOPs and their teams.

Our consultants assist with the formation, registration and ongoing compliance support of regulated entities and the expansion of brokerage, advisory and derivatives activities in the U.S. and across borders. We provide enforcement assistance, aid in the performance of independent anti-money laundering and internal audits and interface with regulatory authorities. We have deep experience as industry regulators and senior industry compliance executives at financial services companies, which informs our comprehensive and pragmatic approach to problem-solving. Let us assist your firm in the following areas.

Annual Audit Report

FINRA Rule 3120 requires designated principals at member firms to submit, no less frequently than annually, a report to the firm's senior management that details the firm's system of supervisory controls, the summary of the test results and significant identified exceptions, and any additional or amended supervisory procedures. FINRA Rule 3130 requires a certification to be made by the member firm’s chief executive officer regarding the adequacy of the supervisory system. Please contact us if you would like more information on any of these requirements or require assistance executing an audit.

Independent AML Audit

Our regulatory experience, combined with our expansive transactional knowledge, makes us the firm of choice for member firms when conducting independent reviews. We are well positioned to engage in audits. Our clients include limited scope brokers, mid-sized broker dealers and financial institutions. Consistent with the Bank Secrecy Act, FINRA Rule 3310 also requires firms, at a minimum, to provide for annual (on a calendar-year basis) independent testing for compliance to be conducted by member personnel or by a qualified outside party. If the firm does not execute transactions with customers or otherwise hold customer accounts or act as an introducing broker with respect to customer accounts (e.g. engages solely in proprietary trading or conducts business only with other broker dealers), the independent testing is required every two years (on a calendar-year basis).

FINRA Enforcement

Small firms represent a critical portion of FINRAs membership and often face regulatory challenges that are unique from their large firm counterparts. FINRA investigates potential securities violations and, when appropriate, brings formal disciplinary actions against firms and their associated persons. FINRA investigations may be opened from various sources, including automated surveillance reports, examination findings, filings made with FINRA, customer complaints, tips, referrals from other regulators or other FINRA departments and press reports. Let our firm provide you with the regulatory guidance and best practices required to fulfill your obligations.

Materiality Consultation

Broker dealers often ask if a change in business operation requires approval from FINRA. We typically advise firms that it depends on the nature of the change. A Materiality Consultation may be necessary. There are two types of Materiality Consultations—voluntary and mandatory. A voluntary Materiality Consultation is one that a firm voluntarily chooses to request with the FINRA MAP Group. A member must submit a letter requesting a materiality consultation for specified changes in ownership, control, or business operations, including business expansions, involving a defined “covered pending arbitration claim,” unpaid arbitration award or unpaid settlement related to an arbitration.  There is no fee collected from FINRA associated with a mandatory materiality consultation. If you have any questions, or would like more information on a Materiality Consultation, please contact our firm.