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 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
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
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?
clients been provided the policy as required?
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
We look to 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, our staff will work with the broker-dealer
on solutions to issues and amend its compliance program to enhance the firm’s
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