Header graphic for print
Securities Compliance Sentinel Analysis of cutting-edge securities industry issues

Category Archives: Books and Records

Subscribe to Books and Records RSS Feed

Why system passwords are not as easy as 123

Posted in Books and Records, Broker-Dealer Regulation, Cyber-Security, Financial Industry Trends, FINRA Compliance, Registered Representatives, SEC Compliance, SEC Enforcement

As we all know, cybersecurity remains a top priority for the SEC and FINRA. Unfortunately, a recent Investment News article would suggest that firms do not take it as seriously, or, at least, firm employees do not. A recent study of passwords by SplashData demonstrates that advisers and firm employees are not taking to heart… Continue Reading

So what does the expedited release of a Form U-5 mean for you

Posted in Books and Records, Broker-Dealer Registration, Broker-Dealer Regulation, Compliance and Supervision, FINRA Compliance, FINRA CRD, FINRA Enforcement

As of December 12, 2015, FINRA will release Form U-5s within three business days of a member firm’s submission, instead of the fifteen days currently provided for under Rule 8312. The current version of the rule was meant to provide the departing registered representative ample opportunity to comment on the disclosure either though a Form… Continue Reading

How can your clients be part of your data security program

Posted in Books and Records, Broker-Dealer Regulation, Cyber-Security, Financial Industry Trends, FINRA Compliance, SEC Compliance, SEC Enforcement

In order to have sound cyber-security protocols, you need to do more than just physically protecting your systems and having written supervisory programs. Specifically, you need to fully engage your clients to be part of the protocol. Their participation can make your program work that much better than without them. How so? For one, every… Continue Reading

Cybersecurity and regulatory enforcement; what are you doing

Posted in Books and Records, Broker-Dealer Regulation, Compliance and Supervision, Cyber-Security, FINRA Compliance, FINRA Enforcement, SEC Compliance, SEC Enforcement

No one likes being a victim, let alone being a victim twice. But that is what you may face if you have a data breach. If your firm had a vulnerability that a hacker exposed, your regulator may come after you regardless if there is any client harm. After all, your system had a gap… Continue Reading

Why elder issues are not just about your clients

Posted in Books and Records, Breach of Fiduciary Duty, Broker-Dealer Regulation, Compliance and Supervision, Conflicts of Interest, Cyber-Security, FINRA Compliance, Ponzi Schemes, Registered Representatives, SEC Compliance, SEC Enforcement, Securities Fraud, Securities Litigation

The SEC and FINRA have made it very clear that they are focused on senior customers and elder abuse. Granted, firms must be focused on the elder customers, but, at the same time, must also focus on the fact that many advisors are included in the graying generation. What are firms to do about that?… Continue Reading

Who wants more reasons to focus on data security

Posted in Books and Records, Broker-Dealer Regulation, Collateral Consequences, Compliance and Supervision, Cyber-Security, Federal and State Criminal Activities, Financial Industry Trends, FINRA Compliance, Investment Adviser Regulation, Investment Company Regulation, Registered Representatives, SEC Compliance, SEC Enforcement, Social Media

The SEC recently issued an investor bulletin regarding one of our favorite topics; data security of customer accounts. The primary areas of the SEC’s focus were: Have a strong password, keep it secure and change it often. Use a two-step verification process if the firm offers it. Use different passwords for different on-line accounts. Avoid… Continue Reading

Do you want to know 5 things that lead to a culture of compliance

Posted in Books and Records, Broker-Dealer Regulation, Compliance and Supervision, Conflicts of Interest, Financial Industry Trends, FINRA Compliance, Registered Representatives, SEC Compliance, SEC Enforcement

In a recent blog, Michael Volkov noted five ingredients to ensure a culture of compliance. Why should you care? It is quite simple, firms that do not promote a culture of compliance are bound to find themselves face to face with their regulator, and not at a holiday party sharing cocktail weenies. So what are… Continue Reading

Who wants to know five compliance trouble areas for state-based advisors

Posted in Books and Records, Compliance and Supervision, Conflicts of Interest, Financial Industry Trends, Investment Adviser Regulation, State Enforcement

As recently reported in the Investment News, the North American Securities Administration Association (NASSA) reported on the results of state coordinated examinations. The relative good news was that there were 30% fewer deficiencies from 2013 to 2015. These examinations revealed, however, five areas of particular concern for state based investment advisors. These issues are: Not… Continue Reading

So who thought that the SEC was not serious about cybersecurity

Posted in Books and Records, Breach of Fiduciary Duty, Cyber-Security, Federal and State Criminal Activities, SEC Compliance, SEC Enforcement

In a recent blog post, I noted that the SEC is undertaking another cybersecurity exam priority. If that was not enough to get your attention about your own cybersecurity program, you need not look any further. The SEC just sanctioned a registered investment advisor for failing to adopt proper cybersecurity policies and procedures prior to… Continue Reading

What you need to know about the SEC cybersecurity exam priority.

Posted in Books and Records, Cyber-Security, SEC Compliance, SEC Enforcement

In a recent risk alert, the SEC announced that it was instituting a second exam priority focused on cybersecurity at broker-dealers and registered investment advisors. The SEC decided to conduct this second targeted exam due to its findings from an earlier cybersecurity exam priority. This new initiative will focus on the following areas: Governance and… Continue Reading

What an amended FINRA Rule 8312 may mean to you.

Posted in Books and Records, Broker-Dealer Registration, Broker-Dealer Regulation, FINRA Compliance, FINRA CRD, FINRA Enforcement

FINRA has released for comment its proposed amendment to Rule 8312, otherwise known as the BrokerCheck Disclosure rule. As it currently stands, FINRA waits for 15 days before it releases information reported on Form U5. This delay was meant to give a registered representative adequate time to comment. FINRA has proposed to change the waiting… Continue Reading

Why therapeutic neglect and an 8210 request do not go hand in hand

Posted in Books and Records, Broker-Dealer Regulation, Compliance and Supervision, FINRA Compliance, FINRA Enforcement

In first of a series of articles on FINRA enforcement and the disciplinary process, Scott Matasar gave some sage advice on dealing with an 8210 request. The biggest take away is that ignoring the request or providing a half-assed response is not the way to make friends at FINRA. First, ignoring an 8210 request will… Continue Reading

What do you need to know about the latest FINRA sweep exam

Posted in Books and Records, Broker-Dealer Regulation, Conflicts of Interest, FINRA Compliance, FINRA Enforcement

FINRA recently sent out targeted exam letters focused compensation practices. The intent of this targeted exam is to assess how firms identify, mitigate and manage conflicts of interest when it comes to compensation paid to registered representatives. This limited examination is designed for information gathering purposes and to determine best practices around the sale of… Continue Reading

Who wants some advice regarding cyber-threats?

Posted in Books and Records, Broker-Dealer Regulation, Collateral Consequences, Compliance and Supervision, Cyber-Security, Federal and State Criminal Activities, Financial Industry Trends, FINRA Compliance, Investment Adviser Regulation, Investment Company Regulation, SEC Compliance

A recent article in Onwallstreet.com highlighted certain areas of focus for investment advisors/broker-dealers when it comes to addressing cyber-threats. The article focused on four areas of particular significance. First, a firm must have a robust risk assessment approach to cyber-security. After all, a firm cannot develop and deploy cybersecurity policies and procedures unless and until… Continue Reading

Who wants to know some pre and post data breach considerations

Posted in Books and Records, Cyber-Security, Financial Industry Trends, Internal Investigations

In a recent blog by Chris Pogue (a digital forensic expert), he highlighted a handful of considerations for firms both pre and post data breach. After all, the issue is not really whether you will suffer a breach, but when and how bad will it be. Those considerations bear repeating, and include the following: Retention… Continue Reading

Who wants more cyber-security guidance

Posted in Books and Records, Cyber-Security, Financial Industry Trends

In a recent article written by Bill Winterberg in the Journal of Financial Planning he highlighted a number of pitfalls that advisors commonly fall into that expose sensitive client data and information to hackers and phishers. By falling into these pitfalls, advisors are unknowingly becoming the tool of the fraudster. Winterberg noted that the following… Continue Reading

Do you really need a reason why not to provide your client with a personal email address

Posted in Books and Records, Broker-Dealer Regulation, Compliance and Supervision, Financial Industry Trends, FINRA Compliance, Investment Adviser Regulation, Law Firms and Lawyers, Public Customer Arbitrations

Not too long ago, I tried a case that had, among other issues, the improper use of the advisor’s personal email account. That improper use serves as a valuable lesson of what can go wrong when you deviate from using the firm approved email. The client emailed complaints about the handling of the account to… Continue Reading

So Who Wants To Give A Vendor Access To Your IT Systems

Posted in Books and Records, Cyber-Security, Federal and State Criminal Activities, Financial Industry Trends, FINRA Compliance, FINRA Enforcement

At one time or another, member firms will likely need the services of an outside vendor. This may be particularly true for smaller member firms. Outside vendors have their place, but FINRA’s Report on Cybersecurity Practices details that level of vigilance needed when it comes contracting with vendors who have access to your IT systems.… Continue Reading

So How Is Your Cybersecurity

Posted in Books and Records, Cyber-Security, Federal and State Criminal Activities, Financial Industry Trends, FINRA Compliance, FINRA Enforcement, SEC Compliance, SEC Enforcement, Social Media

The SEC and FINRA have continued to designate cybersecurity as an exam priority.  Both the SEC and FINRA have also recently published the findings of their exam sweeps.  As reported by the Investment News, the results of those sweeps when it comes to cybersecurity are telling. The sweeps show that firms, much like with compliance,… Continue Reading

Are You Charging Your Customers Too Much

Posted in Books and Records, Breach of Fiduciary Duty, Compliance and Supervision, FINRA Compliance, FINRA Enforcement, SEC Compliance, SEC Enforcement

If you are not asking that question, FINRA may as its recent $350,000 fine levied against a major brokerage house indicates.  In that instance, FINRA found that the brokerage charged 20,000 customers a total of $2.4 million too much for certain transaction fees. For its part, the SEC is going after private equity firms because… Continue Reading

Personal Email For Firm Business – Don’t Do That

Posted in Books and Records, Broker-Dealer Regulation, FINRA Compliance, FINRA Enforcement, Social Media

As firm clients demand more and more access to their registered representatives, member firms must do more to make sure that their brokers do not run afoul of the firm communication written supervisory procedures.  One firm recently failed that test, resulting in a FINRA fine and censure.  In that matter, FINRA found that the member… Continue Reading