TCD News

Financial Industry Regulatory Authority

The controversial merger of NASD Regulation and NYSE Regulation
has been completed and resulted in the creation of the Financial industry Regulatory Authority or FINRA. Over the next several months, we can expect to see various rule proposals for aligning the rule books of the two former regulators as well as the election of new members to the Board of Governors under the amended by-laws.

Conduct Rule 3012

Our recent experiences in assisting clients with regulatory examination filings clearly indicates that FINRA has certain expectations of member firms when it comes to Rule 3012 and its companion Rule 3013.

Firms should be conducting testing and verification of the procedures required under Rule 3010 – Written Supervisory Procedures. Firms should be designing and implementing procedures specific to its activities under Rule 3012 – what, how, and who will test and verify your firm’s supervisory procedures. In addition, firms are required to document the testing and verification carried out.

It is our recommendation that firms begin the process with the WSP Checklist. This allows the firm to determine that procedures do exist for each area the firm is involved. From the WSP Checklist, then tests may be designed to accomplish the requirements of Rule 3012.

Firms should not wait until the days before their certification anniversary to begin the process. It should be an ongoing process that constantly identifies any weaknesses in the firms procedures.

The Compliance Department Inc. has assisted numerous firms with the Certification process. Give us a call to discuss assistance your firm may need.