Reasonable Supervision

buyholdsell.jpgIn a recent speech, FINRA CEO, Richard Ketchum, told broker-dealer compliance officers that, although firm compliance programs have improved, there must be heightened supervision when it comes to complex products.  In light of these comments, you must assume that the supervision over the sale of complex products will be a focus of your next examination.

Many broker-dealers, both large and small, associate with registered representatives as independent contractors instead of employees.  Although this business model is attractive for many reasons, like decreased overhead for the member firm, it potentially creates a headache when it comes to supervision.

FINRA requires “reasonable supervision”, but the challenge is how does the broker-dealer employ