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Broker-dealer firms rely on experienced BRC consultants to recognize and assess their organizations precise compliance risks, while providing expert insight and analysis through regulatory or compliance issues. BRC provides these services through various compliance solutions, including regulatory compliance reviews, anti-money laundering independent testing, regulatory exam and supervisory control risk assessments, fraud investigations, and specialized compliance or product reviews.
BRC’s compliance solutions allow firms to augment available resources, while receiving the direct regulatory perspective and approach desired to assess compliance with changing regulatory requirements in a fluid manner. BRC’s consultants provide firms with direction and/or recommended corrective action for any potential weaknesses/inconsistencies identified or provide complete bundled solutions for select compliance related tasks. Upon engaging BRC’s services, we become a partner in your firm’s compliance efforts.
For our most comprehensive and customizable broker-dealer compliance solution, please see our Diazo Program.
Becoming a FINRA, SEC, and state registered broker-dealer is can be a detailed, complex process which is due primarily to level of detail applied by regulatory staff during the application review period. Based upon FINRA’s level of scrutiny, achieving membership status can often feel like a nearly insurmountable task. BRC’s consultants have held direct regulatory positions conducting review and approval of broker-dealer registrations submissions, thus maintaining a strong understanding of each stage of the membership process.
Through its registration solutions, BRC’s assistance typically includes:
BRC’s consultants are highly experienced and skilled at developing and managing the overall application process on behalf of our clients. BRC has assisted a substantial number of broker-dealers obtain membership status and we look forward to assisting you.
Becoming a FINRA, SEC, and/or state registered broker-dealer is can be a detailed, complex process, primarily to level of detail applied by regulatory staff during the application period. Based upon FINRA’s level of scrutiny, achieving membership status can often feel like a nearly insurmountable task. BRC’s consultants have held direct regulatory positions requiring the review and approval of broker-dealer registrations submissions, thus maintaining a strong understanding of each stage of the process.
Through its registration solutions, BRC’s assistance typically includes:
BRC’s consultants are highly experienced and skilled at developing and managing the overall application process on behalf of our clients. BRC has assisted a substantial number of broker-dealers obtain membership status and we look forward to assisting you.
Pursuant to the USA PATRIOT Act and FINRA Rule 3310 all broker-dealers are required to annually review their anti-money laundering (AML) programs to ensure procedures have been properly implemented and meet regulatory expectations. The annual testing must be completed by a qualified independent third party, in an effort to be certain they are meeting regulatory requirements. Member firms will benefit from the direct regulatory, consulting, and industry experience of BRC’s consultants, who have conducted scores of AML reviews of varying size financial institutions. BRC’s AML Audits are customized based upon the type of broker-dealer being reviewed and the specific risks faced by the organization. Although the risk based focus varies by organization, BRC’s reviews typically assess the following areas:
Upon completion of our reviews, BRC will provide your firm with a detailed customized report outlining inconsistencies identified, observations, and recommended actions pursuant to the requirements of the USA Patriot Act and FINRA Rule 3310. Depending on your firm’s specific needs, BRC is committed to maintaining an ongoing partnership with your firm to provide customized solutions targeted at various compliance related aspects of your firm’s business activities.
Adequate supervisory systems play an important role in assuring investor protection and the integrity of the markets. Operational and sales practice abuses often stem from ineffective supervisory and supervisory control procedures. To address these regulatory concerns, FINRA established and implemented three rules that address a members requirements as they pertain to supervision and supervisory controls: FINRA Rule 3310 (Supervision), FINRA Rule 3120 (Supervisory Controls), and FINRA Rule 3130 (Annual Certification of Compliance and Supervisory Processes). One of the most critical aspects of these requirements is how the requirements of each rule are interpreted. FINRA Rule 3110, 3120 and FINRA 3130 are closely related, yet their obligations are complementary, not duplicative, in nature. The three rules essentially come together to form an overarching regulatory blueprint for the supervision of broker-dealers’ business activities. In order to remain compliant you must assess the various rule requirements as they pertain to your firm’s approved business activities, further analyzing the effectiveness of your firm’s compliance program in relation to these requirements.
BRC utilizes the most current risk based review and examination techniques to analyze overall activities versus supervisory procedures and controls established by your firm. BRC will provide an objective evaluation of your firm’s compliance activities, based upon risks specific to your organization, resulting in a tailored “gap analysis”. The risk based analysis and reviews conducted will be targeted at the areas of your firm’s business activities that pose the highest level of risk based involving a variety of factors (e.g. Revenues, Prior Regulatory Examinations, etc.). The review will test overall policies and procedures specific to these identified areas as well as other areas often a focus during regulatory cycle examinations.
Upon completion of our reviews, BRC will provide your firm with a detailed, customized report outlining our findings, observations, and recommended actions pursuant to the requirements of FINRA Rule 3110 and 3120. Our report may be utilized by your firm as its basis for its completion of the Firm’s CEO certification required pursuant to FINRA Rule 3130. Depending on your firm’s specific needs, BRC is committed to maintaining an ongoing partnership with your firm to provide customized solutions for all compliance related aspects of your firm’s business activities.
Many firms discovers their vulnerabilities or risk during regulatory examinations. Unfortunately, once items are identified in this manner organizations are potentially subject to sanctions for violations, including fines, suspensions, etc. BRC’s consultants have conducted countless simulated reviews to assist firms in identifying if compliance controls are adequate to address each business area prior to being identified by regulators. This is a critical type of review for newly formed broker-dealers in their first year of operation, since many new organizations are unfamiliar with specific regulatory requirements and expectations.
BRC’s Risk Based Assessment Reviews will result in an in-depth evaluation of your broker-dealer’s activities based upon the methodologies often utilized by regulatory staff specific to your business activities. Upon completion, BRC will communicate its observations and remain committed to assisting you with corrective measures and required actions.
Some of the most frequent findings/observations identified during BRC’s reviews include:
Upon completion of our simulated examination, BRC will provide your firm with a detailed, customized report outlining our findings, observations, and recommended actions. Depending on your firm’s specific needs, BRC is committed to maintaining an ongoing partnership with your firm to provide customized solutions for all compliance related aspects of your firm’s business activities. Since BRC’s consultants are primarily comprised of former regulatory staff, our overall approach and manner upon which the simulated audit is conducted, will help ensure your organization is well prepared for its actual regulatory examinations.
The SEC utilizes a territorial approach in determining if a broker-dealer must register under the Exchange Act. A foreign broker-dealer which has no offices in the United States and which conducts its broker-dealer business entirely outside the United States would not be subject to the Exchange Act registration requirements. However, any contacts with the United States could subject the foreign broker-dealer to an obligation to register under the Exchange Act unless such contacts are structured to comply with Rule 15a-6. Such prohibited contacts would include solicitation of investors in the United States by means of telephone, email or other methods of communication, even if the foreign broker-dealer is situated outside the United States when undertaking such solicitation efforts.
Rule 15a-6(a)(2)6 permits a foreign broker-dealer to furnish research reports to major U.S. institutional investors, and effect transactions in the securities discussed in the reports with or for the major U.S. institutional investors, provided, among other things, that the foreign broker-dealer does not initiate contact with the institutions to follow up on the research reports, and does not otherwise induce or attempt to induce the purchase or sale of securities by the institutions. If, however, the foreign broker-dealer has a (chaperone) relationship with a U.S. registered broker-dealer that fulfils the requirements of Rule 15a-6(a)(3), it must effect all transactions resulting from the provision of research through the registered broker-dealer pursuant to the provisions of Rule 15a-6(a)(3).
BRC specializes in assisting foreign broker-dealers seeking to establish FINRA membership or chaperoning arrangements with existing FINRA member firms.
The SEC utilizes a territorial approach in determining if a broker-dealer must register under the Exchange Act. A foreign broker-dealer which has no offices in the United States and which conducts its broker-dealer business entirely outside the United States would not be subject to the Exchange Act registration requirements. However, any contacts with the United States could subject the foreign broker-dealer to an obligation to register under the Exchange Act unless such contacts are structured to comply with Rule 15a-6. Such prohibited contacts would include solicitation of investors in the United States by means of telephone, email or other methods of communication, even if the foreign broker-dealer is situated outside the United States when undertaking such solicitation efforts.
Rule 15a-6(a)(2)6 permits a foreign broker-dealer to furnish research reports to major U.S. institutional investors, and effect transactions in the securities discussed in the reports with or for the major U.S. institutional investors, provided, among other things, that the foreign broker-dealer does not initiate contact with the institutions to follow up on the research reports, and does not otherwise induce or attempt to induce the purchase or sale of securities by the institutions. If, however, the foreign broker-dealer has a (chaperone) relationship with a U.S. registered broker-dealer that fulfils the requirements of Rule 15a-6(a)(3), it must effect all transactions resulting from the provision of research through the registered broker-dealer pursuant to the provisions of Rule 15a-6(a)(3).
BRC specializes in assisting foreign broker-dealers seeking to establish FINRA membership or chaperoning arrangements with existing FINRA member firms.
BRC’s experienced net capital consultants will assist your firm’s FinOp with the required computations and monitoring of net capital and customer reserve computations in accordance with industry standards and generally accepted accounting principles (GAAP) and Securities and Exchange Act Rule 15(c)3-1 and 15(c)3-3. BRC will assist in the timely filing of the FOCUS reports and annual preparation and electronic filing of Schedule, in addition to the annual preparation of FINRA’s assessment form.
BRC can also provide your broker-dealer with experienced financial and operations principals to act as your firm’s FinOp on an interim or long-term basis. Additionally, BRC will monitor your intra-day capital levels to avoid early warnings and net capital deficiencies.
Due to the continuously changing regulatory rule interpretations, FinOp’s are required to stay aware on all rule changes or new interpretations that may impact their firm’s net capital position and ultimately their ability to conduct certain types of securities activities. BRC’s FINOP services will enable your firm to outsource its financial preparation to experienced professionals continuously monitoring the overall regulatory environment.
Due to BRC’s extensive regulatory and industry experience, BRC can provide specific financial compliance related support for your firm’s overall net capital capabilities.
Examination staff recently completed their onsite portion of their examination and you just received a request from the lead examiner requesting an “on the record” (OTR) interview. This request will most likely result in you asking a number of questions:
Testimony before FINRA or the SEC is an extremely serious matter. Regulators can ask questions on nearly any topic during the examination process, and incorrect testimony can have serious consequences for the registered representative and/or your firm. As such this testimony should not be provided without first consulting with experienced professionals who can guide and prepare you for the unexpected. If the matter is not properly handled from the outset, the reputational damage can be long lasting, and expensive.
BRC consultants have extensive experience consulting OTRs as former regulators, which enables our consultants to accurately replicate the overall process you will experience. Additionally, BRC will assist in collecting, preparing and reviewing documents essential for your OTR.
Based upon the direct regulatory examination experience, BRC consultants provide a valuable perspective and ability to provide expert witness testimony.
In a post-Madoff regulatory environment, the regulatory landscape has shifting towards fraud investigations. With the SEC and FINRA instituting measurements to improve their ability to detect fraud and other types of violations, it is anticipated this area will be a focus of routine examinations and new regulatory expectation place upon firms. BRC’s specialized staff, has completed fraud related reviews involving trading, operations, portfolio management, options, compliance, valuations, structured products can be relied upon to conduct simulated fraud investigations prior to any potential examinations by regulators. The ability to detect and take immediate corrective action after uncovering nefarious acts by an internal or external party, will give regulators the assurance that your firm’s supervisory system is working accordingly which may result in less scrutiny. Additionally, upon request BRC can incorporate fraud reviews as a component of other standard supervisory and/or annual reviews.
BRC’s extensive regulatory and industry experience allows our consultants to offer practical recommendations on how to create and implement solutions in conjunction with regulatory mandated review requirements. Regulatory sanctions can involve fines, suspensions, terminations, as well as mandated (required) third party consulting reviews or support. This offers a beneficial service to firms aiding their compliance efforts, in lieu of paying monetary fines and penalties. In such situations, BRC works closely with the firm and the regulators to ensure all areas of concern are properly addressed, while ensuring compliance program is properly establish to minimize the likelihood for exceptions to reoccur. Our goals include creating solutions to meet the mandates, implementing an immediate training program and maintaining continuous communications with the agency which initiated the mandate on the firm’s behalf. Our goal is to ensure you and your firm are not subject to such sanctions and regulatory action in the future.
Whether regulatory guidance is needed to review and provide guidance for all retail and institutional advertisements/sales literature or to perform targeted reviews, allow BRC’s consultant to assist your compliance staff with staying current with applicable changes to securities rules and regulations. BRC will review your marketing materials, advertising and sale literature with the direct regulatory perspective providing a valuable resource and objective approach to your compliance staff. BRC will assist you with creating specific required disclosures and supervisory procedures in accordance with specific advertising rules and interpretations. Additionally, BRC’s services also include submission assistance to FINRA’s Advertising Regulation Department, as well as acting as a liaison with FINRA staff on your firm’s behalf.
A robust and comprehensive risk management system should be customized, reflecting the risks and complementary controls for the particular organization and all business activities of the broker-dealer.
BRC believes each member firm’s supervisory policies and procedures should be a customized via a “Blueprint” specifically tailored to the firms approved business activities and risks. BRC will work with your firm to develop customized and comprehensive policies and procedures, while remaining a committed partner assisting your firm with continuous updates. Written supervisory policies and procedures are the foundation of an organizations compliance program. The majority of regulatory actions include material policy and procedure deficiencies directly related to lack of customization and implementation. Utilizing BRC’s policies and procedures review and development solutions can provide you with the peace of mind knowing your procedures have been customized and are continuously being monitored for required changes.
BRC’s extensive regulatory and industry experience can assist your compliance staff with specialized compliance product reviews. Whether your firm has added a new product line or has begun conducting significant activity in a pre-existing business area, BRC will conduct and in-depth evaluation of the specific product risks and adequacy of your firm’s procedures and controls. BRC’s unique examination approach and risk detection methodologies can provide your firm with the understanding of the specific requirements and expectations related to specific product areas prior to you receiving a direct regulatory examination.
The introduction of a new product or changes to existing product requirements may subject your firm to greater risks, including but not limited to:
BRC will work with your compliance and product development staff prior to product changes in order to reduce regulatory exposure and create required procedures and controls. Don’t wait for regulatory examination staff to advise your firm of product related deficiencies. BRC’s specialized product review solutions can proactively conduct the required evaluation, which will reduce the likelihood that your firm will receive any regulatory sanctions related to the specific product area.
Whether training is required for a new product or as part of your firm’s annual compliance meeting, or even a regulatory-mandated training requirement, BRC’s consultants as former regulators can provide customized training a number of areas, including but not limited to:
BRC can conduct the training onsite at your firm or remotely in order to reach all required parties and factoring your firm’s budgetary costs. Additionally, BRC can provide enhanced training to compliance managers in relation to regulatory examination techniques and risk identification in order to further develop your firms overall compliance program and detection capabilities. Adequate and robust training is often a mitigating factor analyzed by examination staff, so enjoy the peace of mind that your training program has been customized by BRC specific to the risk activities of your firm.
BRC offers bundled compliance services that enable broker-dealers to customize products and services that fit their programs targeted areas, while keeping each client’s budgets in mind. The services offered through our Diazo Program have the effect of adding experienced compliance professionals to your firm’s compliance staff, without the related staffing expenses of full-time hires. Our Diazo Program packages can be modified in duration to fit your organization’s specific needs and can be implemented based upon risk parameters to accommodate your budget. You can select from any combination of BRC’s broker-dealer services to establish your own personalized solution. If unsure of the most beneficial services to select based upon the risks of your organizations business activities, BRC can incorporate a risk based review service upon inception of our relationship in order to provide targeted recommendations concerning the services that would address the areas of your compliance program requiring further enhancement.
