ACA BROKER-DEALER NEWSLETTER

ACA COMPLIANCE | APRIL 2015
ACA BROKER-DEALER NEWSLETTER
“When legal and compliance departments are not treated as full partners in the
business, regulatory problems are inevitable.”
– Andrew Ceresney, Director, U.S. Securities and Exchange Commission - Division of Enforcement
Remarks at SIFMA’s 2015 Anti-Money Laundering & Financial Crimes Conference
Feb. 25, 2015
FINRA 2015 Examination Priorities Letter Highlights
On January 6, 2015, the Financial Industry Regulatory Authority (“FINRA”) released its 2015 Regulatory and Examination Priorities
Letter (the “Letter”). Within the Letter, FINRA identified five generally recurring challenges for broker-dealers:
1.Putting Customer Interests First: FINRA noted that
“a central failing…observed is firms not putting customers’
interests first.” This examination area focuses on ensuring
that an investor’s best interests are always a firm’s top priority.
2.Firm Culture: Here FINRA noted that “many of the
problems we have observed in the financial services industry
have their roots in firm culture.” The agency urges firms to
institute a “tone at the top” compliance focus. Among other
benefits, a robust culture of compliance will help discourage
unethical behavior by associated persons.
3.Supervision, Risk Management, and Controls:
FINRA observed that “a firm’s systems of supervision, risk
management, and controls are essential safeguards to protect
and reinforce a firm’s culture.” It also notes that robust
supervision, risk management, and controls reduce the risk of
compliance violations.
4.Product and Service Offerings: FINRA cautioned that
“the sales of novel products and services remain a regulatory
flashpoint.” It advises firms to conduct rigorous new product
reviews and institute customer-specific suitability practices
to ensure they provide the best products and service to their
investors.
5.Conflicts of Interests: FINRA noted that “conflicts of
interest are a contributing factor to many regulatory actions
FINRA (and other regulators) have taken against firms
and associated persons.” Instituting and maintaining conflict
management policies and procedures will help reduce
regulatory risk in this regard while enhancing investor
protection.
INSIDE THIS ISSUE
FINRA 2015 Examination Priorities Letter Highlights
Overview of FINRA’s 2015 Key Areas of Focus
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Changes in Background Checks……...……...……...……...……...……...……...……..3
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ACA BROKER-DEALER NEWSLETTER | APRIL 2015
Overview of FINRA’s 2015 Key Areas of Focus
Sales Practices: Products
FINRA identified a number of sales practice concerns in this year’s Letter. The overlying themes are familiar to the industry: suitability,
disclosure, training, and supervision as it relates to product and service offerings.
The products regularly identified in the agency’s examination priority letters include the following:
•Variable Annuities: Examiners will review for compliance
with FINRA Rule 2210(c)(2)(a) regarding a firm’s obligation to
file with FINRA any retail communications regarding variable
annuities within 10 business days of first use. FINRA will also
place substantial focus on sales of “L share” annuities.
•Private Placement Securities: Performing adequate due
diligence and suitability, and providing the evidence thereof,
continues to remain a challenge for the industry. Firms should
ensure they have sufficient suitability and due diligence
policies and procedures in place and enforce strict adherence
them.
•Non-traded Real Estate Investment Trusts (REITs):
FINRA continues to have concerns regarding the illiquidity of
this product and the challenges surrounding REIT valuations.
•Structured Products: Registered representative knowledge
of these complex products remains a steadfast area of focus
for regulators each year. FINRA advises broker-dealers
that examiners will evaluate the level of structured product
training completed by their registered individuals.
•Fixed-Income Products: Examiners will look to see that
firms clearly communicate to their investors the impact of
interest rate changes on prices, especially for products deemed
to be interest-rate sensitive.
•Exchange-Traded Products (ETPs): FINRA has
apprehensions surrounding the marketing of these products,
especially as these indices are based on an alternative
weighting strategy.
New products addressed in the Letter include the following:
•Alternative Mutual Funds: FINRA will evaluate whether
firms clearly communicate the characteristics of these
products to customers. Specifically, examiners will want to
know if customers have been educated on how these funds
react to market changes.
•Floating-Rate Bank Loan Funds: FINRA’s focus on
this product will center primarily on the liquidity challenges
surrounding these funds and the increased retail investor
interest.
•Securities-Backed Lines of Credit: Examiners will test a
firm’s operational and supervisory controls for monitoring an
investor’s brokerage account activities with regard to the lines
of credit in use by the investor.
Cybersecurity
FINRA continues to be concerned regarding information technology (“IT”) and cybersecurity risk management. Firms should be
prepared to demonstrate what IT safeguards they have in place, the methodology and frequency of their IT testing, and what training
they provide to associated persons in this respect. Furthermore, firms should be prepared to discuss how they escalate and remediate
IT breaches and other cybersecurity incidents. In addition, regulators will review firms’ compliance with Exchange Act Rule 17a-4(f)
electronic data storage requirements.
Individual Retirement Account (IRA) Rollovers (and Other “Wealth Events”)
The Letter identified “wealth events” as “situations where an investor faces the decision about what to do with a large amount of money
arising from an inheritance, life insurance payout, sale of a business or other major asset, divorce settlement or an IRA rollover, among
other events.” FINRA will look to see that registered representatives provide suitable investment recommendations for wealth events,
including IRA rollovers. In particular, communications pertaining to 401(k) rollovers will be a key focus for FINRA this year.
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ACA BROKER-DEALER NEWSLETTER | APRIL 2015
High-Risk and Recidivist Brokers
FINRA Document Requests
Policies and practices surrounding hiring and supervising highrisk registered individuals will continue to receive significant
scrutiny by FINRA. Firms should also be aware of the FINRA
background check rule (FINRA Rule 3110(e)) newly approved by
the SEC. Effective July 1, 2015, firms must verify the accuracy of
Form U4 information. Furthermore, their written procedures
will need to be amended to reflect the new verification process,
especially with regard to searching public records.
FINRA observed that firms have been struggling to respond
promptly to examination requests for information. “Promptly”
is generally understood to mean within 24 hours of the request.
Broker-dealers should be prepared to provide examiner-requested
information within that timeframe. They should also confirm
that they can readily procure records based on the SEC and
FINRA requirements for retaining books and records.
Conclusion
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New FINRA Supervisory Rules
FINRA will also be checking this year on how firms adapt
and adhere to new Rules 3110, 3120, 3150, and 3170. Firms
should update their procedures to address these requirements
and communicate to registered representatives what their
responsibilities are.
Anti-Money Laundering (“AML”) Issues
Examination priority letters have been an essential source to
guide broker-dealers on significant areas of regulatory risk
since FINRA began publishing these notices 10 years ago. We
encourage all FINRA member firms to review the 2015 letter
in its entirety to determine how the topics might affect their
compliance measures.
Please contact ACA for more information or guidance regarding
the implications of FINRA’s 2015 Regulatory and Examination
Priorities Letter.
FINRA continues to focus on how firms monitor AML and
identification of suspicious activities. This year, FINRA will pay
particular attention to activity in Cash Management Accounts
(“CMA”) and Delivery versus Payment/Receipt versus Payment
(“DVP/RVP”) accounts. Foreign DVP/RVP accounts will also be
of particular interest.
Changes in Background Checks
On December 30, 2014, the SEC approved FINRA’s proposed
rule change related to requirements to conduct background
checks of registration candidates. The rule, amended FINRA
Rule 3110(e), becomes effective July 1, 2015. It requires
broker-dealers to “ascertain by investigation the good character,
business reputation, qualifications, and experience” of
registration candidates prior to their registration.
The rule also requires each FINRA member to prepare written
procedures to “verify the accuracy and completeness of the
information contained in an applicant’s initial or transfer Form
U4 no later than 30 calendar days after the form is filed with
FINRA.” FINRA has noted that the Form U4 provides useful
information to establish whether an individual should be
statutorily disqualified and to calculate a firm’s exposure to
regulatory risk. Firms also use the information to identify
individuals that require enhanced supervision. Finally, investors
have access to this information on BrokerCheck. Such
information needs to be accurate so that investors can make
informed decisions regarding their relationship with registered
persons.
New Investigation Criteria
Prior to the rule change, regulators expect firms to conduct, at a
minimum, reviews of candidates’ Central Registration Depository
histories (including previous Form U4s and previous Form U5s
from firms with which they were previously registered), reviews
of candidates’ FBI processed Fingerprint Card results, and
verifications of candidates’ previous employment.
New Expectations under Rule 3110(e)
In accordance with Regulatory Notice 07-55, firms are required
to contact candidates’ employers from the previous three years
to verify employment, documenting the name of the person
contacted and the dates of any communications. Under amended
FINRA Rule 3110(e), firms will also be required to complete
a national search of “reasonably available public records.” This
review may be completed by the firm or by a third party
contracted by the firm. FINRA defines a “reasonable” search to
include, at a minimum, a review of
• criminal records,
• bankruptcy records, and
• judgments and liens.
ACA BROKER-DEALER NEWSLETTER | APRIL 2015
Firms should also consider a candidate’s expected job role and
responsibilities when ascertaining the depth of the background
search to be conducted.
In cases where verifying information is not feasible or practical,
FINRA does not expect firms to confirm all information.
However, should these occasions arise, firms must document why
the information could not be verified and maintain that
documentation.
How to Meet Rule 3110(e) Criteria
For firms to satisfy the new requirements, FINRA suggests they
obtain and review information from any of the following sources:
• National credit-reporting agency reports
• Reputable public records databases
• Specialized provider background check reports
One very important note here is that firms must be mindful of
federal and state privacy regulations. Firms also need to ensure
they complete all required search authorizations and maintain
the authorizations as part of their books and records.
Documentation of the results of the searches should also be
maintained.
Temporary Refund Program
As part of this rule change, FINRA established a temporary
refund program to address underreported Form U4 information.
The refund program has a retroactive effective date of April 24,
2014, and will expire on December 1, 2015. It pertains
specifically to cases where a firm did not complete Form U4
reporting because it believed that satisfying a judgment or lien
shortly after learning of it removed the need to report.
FINRA will issue late disclosure fee refunds only for cases that
involve the late filing of responses specific to Form U4 Question
14M where the Form U4 amendment filing has taken place
between April 24, 2014, and December 1, 2015, and one of the
following criteria is met:
•The judgment or lien has been satisfied and, at the time it was
unsatisfied, was under $5,000.
•The date of the court filing for the judgment or lien (DRP
Question 4A) was on or before August 13, 2012.
•The unsatisfied judgment or lien was satisfied within
30 calendar days of the individual learning of it (DRP
Question 4B).
Preparing for Change
Should a candidate be concurrently registering with more than
one affiliated firm, a single verification may be completed by
one of the affiliated firms. In instances where a candidate
is registering with an affiliated firm subsequent to a previous
registration with at least one affiliate, the filing firm must verify
the Form U4 information only for those areas that contain newly
disclosed information.
In anticipation of the July 1, 2015 rule change, firms should take
the following actions:
•Review their onboarding processes, forms, and checklists
to make sure they will meet all requirements under the
amended rule.
•Advise affected associated persons and staff of the new
requirements.
•Provide training on new responsibilities to individuals
performing background investigations.
•Update their written supervisory procedures to reflect how
the firm will meet the amended rule’s requirements.
Verification Timing
Please contact ACA for more information or guidance pertaining
to the new background checks.
How to Deal with Candidate Registrations with
Affiliated Firms
As noted, amended FINRA Rule 3110(e) requires firms to verify
the accuracy and completeness of Form U4 information no
later than 30 calendar days after filing an individual’s initial or
transfer Form U4. As before, any subsequent amendments to
Form U4 must be completed within 30 calendar days of the Firm
learning of an event that requires a revision. In cases involving
“circumstances beyond a firm’s control,” firms may not be able to
complete their verifications within the specified time frame. In
these instances, they must document the reason for the delay.
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ACA BROKER-DEALER NEWSLETTER | APRIL 2015
Recent FINRA Rule Consolidations and Amendments
FINRA recently updated its rules relating to payments to unregistered persons. The revisions include consolidating FINRA Rule 2040
(“Payments to Unregistered Persons”) and FINRA Rule 0190 (“Effective Date of Revocation, Cancellation, Expulsion, Suspension, or
Resignation”) and amending FINRA Rule 8311 (“Effect of a Suspension, Revocation, Cancellation, or Bar”). Regulatory Notice 15-07
(“Payments to Unregistered Persons”) provides the details on these updates. We summarize some of the more salient changes below.
•New FINRA Rule 2040 aligns with Section 15(a) of the
Securities Exchange Act of 1934 (“SEA”). The rule instructs
firms to review SEC rules to determine whether certain
activities require their registration as broker-dealers under
SEA Section 15(a). In addition, Supplementary Material .01
of Rule 2040 provides guidance to help firms reasonably
determine whether an unregistered person must be registered
under SEA Section 15(a).
•FINRA Rule 2040(b) replaces NASD IM-2420-2 with respect
to FINRA’s continuing commission policy. The rule takes
into account existing FINRA and SEC staff guidance on
broker-dealer payments of continuing commissions to retiring
registered representatives. Per the new rule, a broker-dealer
can pay continuing commissions derived from accounts
held for continuing customers to its retiring registered
representatives, regardless of whether customer funds or
securities are added to the accounts during the retirement
period, as long as the following conditions are met:
oT here must be a bona fide contract between the
broker-dealer and the retiring registered representative
stating that the payments were entered into in good faith
while the retiring person was a registered representative
of the firm. Such contract must prohibit the retiring
registered representative from soliciting new business,
opening new accounts, or servicing the accounts generating
the continuing commission payments.
oT he arrangement must comply with applicable federal
securities laws and SEA rules and regulations.
•Rule 2040(c) replaces NASD Rule 1060(b) and NYSE
Interpretation 345(a)(i)/03. The new rule notes that
brokers-dealers and associated persons are permitted to pay
transaction-based compensation to nonregistered foreign
finders only where the finders’ participation is the initial
referral of non-U.S. customers to the broker-dealer. In order
to comply with this rule, the broker-dealer must meet all
conditions outlined as follows:
oT he broker-dealer is confident that the finder receiving the
compensation is not required to register in the U.S. as
a broker-dealer and it is not subject to disqualification as
defined in Article III, Section 4 of FINRA’s By-Laws.
oT he finder is a foreign national (not a U.S. citizen) or
foreign entity domiciled abroad.
oT he customers are foreign nationals (not U.S. citizens) or
foreign entities domiciled abroad transacting business in
foreign or U.S. securities.
oCustomers receive a document disclosing what
compensation is being paid to finders (similar to the one
required by Rule 206(4)-3(b) of the Investment Advisers Act
of 1940).
oCustomers provide written acknowledgement to the
broker-dealer of their awareness of the compensation
arrangement. The document will be retained and made
available for inspection by FINRA.
oPayments to finders are documented and maintained on the
broker-dealer’s books.
oAgreements between member firms and finders are
available for inspection by FINRA.
oEach transaction confirmation notes that a referral or
finder’s fee is being paid as required by an agreement.
•Changes to FINRA Rule 8311 remove duplicative provisions
in NASD IM-2420-2 and clarify the scope of the rule
as it applies to broker-dealer payments to persons subject to
suspension, revocation, cancellation, or other
disqualifications.
•FINRA Rule 0190 is based mainly on NASD IM-2420-1(a). It
states that broker-dealers will no longer be considered FINRA
members from the effective date of any order or notice
from FINRA or the SEC issuing a revocation, cancellation,
expulsion, or suspension of their membership.
The new rules and amendments become effective August 24,
2015.
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ACA BROKER-DEALER NEWSLETTER | APRIL 2015
Did You Know…
FINRA Qualification Exam Restructuring
SIE exam details:
FINRA will restructure its qualification exam slate during the
fourth quarter of 2015 and the first quarter of 2016. The agency
announced the forthcoming exam changes on March 10 at the
Association of Registration Management (“ARM”) Annual
Education Conference.
1.Individuals can take the SIE without being sponsored by
a FINRA member firm.
As part of its restructuring, FINRA expects to introduce the
following exams:
3.Individuals who are registered with top-off exams will be
grandfathered in and will not need to take the SIE.
•Securities Trader (“ST”) (Series 57) – This exam will combine
and replace the Series 55 (Equity Trader) and Series 56
(Proprietary Trader) exams. Current Equity Trader and
Proprietary Trader registrants will be “grandfathered” into the
Series 57 license.
4. Each SIE exam completion is good for four years.
oWe also note here that the new Securities Trader Principal
(“TP”) qualification will require passing the Series 57
and Series 24 and will permit the principal to supervise
securities trader activities.
•Securities Industry Essential (“SIE”) – This exam is designed
to ensure that registered representatives have a good
understanding of the industry. It will include but not be
limited to the following topic areas:
oSecurities industry structure and function
oRegulatory agencies and their functions
oBasic economics
oProduct knowledge (stocks, bonds, mutual funds)
oRegulated and prohibited practices
oProfessional conduct
After passing the SIE, individuals will have the option to take
FINRA’s “top-off” exams for the Series 6, Series 7, Series 22,
Series 55/56, Series 79, Series 82 , Series 86/87, and Series 99
licenses.
To clarify, if someone wants to be Series 7 and Series 99
registered, he or she must pass the SIE and then pass the Series 7
and 99 top-off exams. According to FINRA, the SIE will
comprise approximately 100 questions and the top-off exams will
comprise the remaining series’ questions (e.g., the Series 7
exam has 250 questions, so the Series 7 top-off exam will have
150 questions).
2.Passing the SIE alone will not qualify a person to hold a
registered position.
5.If an individual has passed the SIE and been out of the
industry for two to four years, he or she will only need to
take the top-off exam. Individuals out of the industry for
more than four years will need to take the SIE and the
top-off exam.
FINRA is also proposing to “retire” some licenses in the future.
These include the following:
• Series 42 – Options Representative
• Series 62 – Corporate Securities Representative
• Series 72 – Government Securities Representative
• Series 11 – Assistant Representative – Order Processing Exam
Furthermore, FINRA is assessing whether the Series 17, 37, and
38 licenses should be exempt from the SIE exam.
During discussions at the ARM conference, FINRA informed
the group that a concept release outlining the proposed changes
will be issued in the coming weeks.
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ACA BROKER-DEALER NEWSLETTER | APRIL 2015
FINRA Fee Increase
In March 2015, the Financial Industry Regulatory Authority (“FINRA”) released Regulatory Notice 15-08, which outlines changes to
FINRA’s qualification exam fees. The amendment increasing the fees is described in Section 4(c) of Schedule A of the FINRA By-Laws.
In addition, the Municipal Securities Rulemaking Board (“MSRB”) recently increased its exam delivery fee from $60 to $150. The new
exam increases are described in MSRB Regulatory Notice 2015-05. The new fees became effective April 1, 2015.
FINRA and the MSRB evaluate their exam programs regularly to determine if current prices align with the cost of implementing,
proctoring, and delivering exams. In a recent evaluation, FINRA and the MSRB found it necessary to raise exam fees. The fees noted
below for the municipal securities exams include both the MSRB fee and an administrative fee paid to FINRA. The changes in the fees
are outlined as follows.
Series
Examination Title
Current Fee
New Fee
Series 4
Registered Options Principal
$100
$105
Series 6
Investment Company Products/Variable Contracts Representative
$95
$100
Series 7
General Securities Representative
$290
$305
Series 9
General Securities Sales Supervisor – Options Module
$75
$80
Series 10
General Securities Sales Supervisor – General Module
$120
$125
Series 11
Assistant Representative – Order Processing
$75
$80
Series 14
Compliance Official
$335
$350
Series 16
Supervisory Analyst
$230
$240
Series 17
Limited Registered Representative
$75
$80
Series 22
Direct Participation Programs Representative
$95
$100
Series 23
General Securities Principal Sales Supervisor
$95
$100
Series 24
General Securities Principal
$115
$120
Series 26
Investment Company Products/Variable Contracts Principal
$95
$100
Series 27
Financial and Operations Principal
$115
$120
Series 28
Introducing Broker-Dealer Financial and Operations Principal
$95
$100
Series 37
Canada Module of S7 (Options Required)
$175
$185
Series 38
Canada Module of S7 (No Options Required)
$175
$185
Series 39
Direct Participation Programs Principal
$90
$95
Series 42
Registered Options Representative
$70
$75
Series 51
Municipal Fund Securities Limited Principal
$155*
$255*
Series 52
Municipal Securities Representative
$180*
$280*
Series 53
Municipal Securities Principal
$165*
$265*
Series 55
Limited Representative – Equity Trader
$105
$110
Series 62
Corporate Securities Limited Representative
$90
$95
Series 72
Government Securities Representative
$105
$110
Series 79
Investment Banking Qualification Examination
$290
$305
Series 82
Limited Representative – Private Securities Offering
$90
$95
Series 86
Research Analyst – Analysis
$175
$185
Series 87
Research Analyst – Regulatory
$125
$130
Series 99
Operations Professional
$125
$130
*Fee includes both increased FINRA administrative fee and MSRB exam delivery fee effective April 1, 2015.
The new fees will apply to any exams requested through Web CRD on or after April 1, 2015.
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ACA BROKER-DEALER NEWSLETTER | APRIL 2015
8
In Case You Missed it…
FinCEN Advisory – Financial Action Task Force
Updates Lists of Jurisdictions with Strategic AntiMoney Laundering and Counter-Terrorist Financing
Deficiencies
Earlier this year, the Financial Action Task Force (“FATF”)
updated its listing of jurisdictions with strategic Anti-Money
Laundering (“AML”)/Counter-Terrorism Financing (“CTF”)
deficiencies. These changes may affect the obligations and
risk-assessment procedures of U.S. financial institutions with
respect to these jurisdictions.
The updated jurisdiction list appears in two documents:
•Jurisdictions subject to the FATF’s call for countermeasures
or subject to Enhanced Due Diligence (“EDD”) due to AML/
CFT deficiencies appear in the FATF Public Statement.
•Jurisdictions identified by the FATF as having AML/CFT
deficiencies appear on the Improving Global AML/CFT
Compliance: Ongoing Process web page.
We recommend that financial institutions consider the recent
updates when reviewing their EDD and risk-assessment policies
and procedures.
MSRB’s Electronic Municipal Market Access
(“EMMA”) Website to Provide Access to Moody’s
Public Finance Ratings
On March 2, 2015, the Municipal Securities Rulemaking Board
(“MSRB”) announced that later this year its EMMA website will
include public finance ratings from Moody’s Investors Service.
This inclusion will provide the public with a consolidated
resource to find key information on every municipal security.
The EMMA website currently provides ratings from Fitch
Ratings, the Kroll Bond Rating Agency, and Standard & Poor’s.
MSRB indicated the addition of Moody’s ratings will help
promote market transparency and make the EMMA website “an
even more powerful tool for investors and other municipal
market participants.”
MSRB Rule Amendments Create Professional
Qualification Standards for Municipal Advisors
On February 26, 2015, MSRB received approval from the SEC
to amend certain MSRB rules with respect to municipal advisor
professional qualification requirements. The amendments include
the following:
•
MSRB Rule G-2 – Revisions to the standards of professional
qualification
•
MSRB Rule G-3 and MSRB Rule D-13 – Changes that
establish two new registration classifications for municipal
advisors: (1) municipal advisor representatives – those
individuals who engage in municipal advisory activities; and
(2) municipal advisor principals
Per amended MSRB Rule G-3, an individual must pass the
municipal advisor representative qualification examination
(Series 50) to qualify as a municipal advisor representative or
municipal advisor principal.
The MSRB also announced that it will establish a pilot test for
the Series 50 in the fall of 2015. MSRB indicated that anyone
who passes the pilot test will be qualified to act as municipal
advisor representatives or principals as if they had passed
the actual test. The pilot test dates have not yet been released.
Those interested in taking it may add their names to an
email distribution list on the MSRB website to receive more
information.
In addition to creating the two new municipal advisor
classifications, MSRB Rule G-2 amendments clarify that no
municipal advisor may engage in municipal advisory activities
unless that municipal advisor is qualified in accordance with
MSRB rules.
Additionally, the definition of “municipal advisory activities”
in MSRB Rule D-13 has been revised to incorporate this SEC
description: “the term ‘municipal advisory activities’ means,
except as otherwise specifically provided by rule of the Board, the
activities described in Section 15(B)(e)(4)(A)(i) and (ii) of the Act
and the rules and regulations promulgated thereunder.”
Furthermore, MSRB Rule G-1 has been revised to assign
“separately identifiable department or division of a bank” within
the municipal advisory activities the same meaning as Exchange
Act Rule 15Ba1-1(d)(4).
These rule amendments became effective on April 27, 2015.
If you have any questions in respect to any of the topics discussed
in this section, please contact Dee Stafford or your ACA
consultant.
ACA BROKER-DEALER NEWSLETTER | APRIL 2015
ACA Events
Broker-Dealer 2015 Roundtables
ACA Annual Conferences
May 12 – New York, NY
June 9 – Columbus, OH
July 22 – Chicago, IL
August 4 – Kansas City, KS
September 29 – St. Louis, MO
Fall 2015 Compliance Conference
October 28-30 - Hyatt Regency Scottsdale Resort & Spa at Gainey
Ranch, Scottsdale, AZ
FINRA Conferences
2015 Annual FINRA Conference
May 27-29, 2015 - Washington, DC
Regulatory Notices, Updates, and Rule Changes
FINRA
2015
Regulatory Notice 15-08
Changes to Qualification Examination Fees
Effective Date: April 1, 2015
Regulatory Notice 15-07
SEC Approves Consolidated FINRA Rules 2040 (Payments to Unregistered Persons) and 0190 (Effective Date of Revocation,
Cancellation, Expulsion, Suspension or Resignation), and Amendments to FINRA Rule 8311 (Effect of a Suspension, Revocation,
Cancellation, or Bar)
Effective Date: August 24, 2015
Regulatory Notice 15-05
SEC Approves Consolidated FINRA Rule Regarding Background Checks on Registration Applicants
Effective Date of FINRA Rule 3110(E): July 1, 2015, Effective Date of FINRA Rule 3110.15: April 24, 2014, To December 1, 2015
Regulatory Notice 15-02
SEC Approves Amendments to FINRA Rule 2310 and NASD Rule 2340 to Address Values of Direct Participation Program and
Unlisted Real Estate Investment Trust Securities
Effective Date: April 11, 2016
2014
Information Notice
12/30/14 Annual Audit; FOCUS; Form Custody; Supplemental Statement of Income (SSOI); Supplemental Schedule for Derivatives
and Other Off-Balance Sheet Items (OBS); and Supplemental Inventory Schedule (SIS)
Regulatory Notice 14-53
FINRA Reminds Alternative Trading Systems (ATSs) and ATS Subscribers of Their Trade Reporting Obligations in TRACE-Eligible
Securities
Regulatory Notice 14-49
SEC Approves Amendments to the Codes of Arbitration Procedure to Increase Arbitrator Honoraria by Increasing Arbitration Filing
Fees, Member Surcharges and Process Fees and Hearing Session Fees
Effective Date: December 15, 2014
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ACA BROKER-DEALER NEWSLETTER | APRIL 2015
Regulatory Notice 14-43
SEC Approves Supplemental Inventory Schedule
Regulatory Notice 14-42
SEC Approves Amendments to the Arbitration Codes to Expand Arbitrators’ Authority to Make Referrals During an Arbitration
Proceeding
Regulatory Notice 14-39
New Template Available on FINRA Firm Gateway for Compliance With SEA Rule 17a-5(f)(2) (Statement Regarding Independent Public
Accountant)
MSRB
2015-05
MSRB Amends Fees Charged for Qualification Examinations
2015-04
MSRB to Amend Rules to Create Professional Qualification Standards for Municipal Advisors
2015-03
Bank Loan Disclosure Market Advisory
2015-02
Amendments to EMMA Continuing Disclosure Service to Add Asset-Backed Securities Disclosures Under Securities Exchange Act
Rule 15Ga-1 Effective January 9, 2015
2014-22
SEC Approves MSRB Rule G-18 on Best Execution of Transactions in Municipal Securities and Related Amendments to Exempt
Transactions with Sophisticated Municipal Market Professionals
2014-21
Amendments to EMMA Continuing Disclosure Service to Add Asset-Backed Securities Disclosures Under Securities Exchange Act
Rule 15Ga-1
2014-19
SEC Approves MSRB Rule G-44 on Supervisory and Compliance Obligations of Municipal Advisors, and Amendments to MSRB
Rules G-8 and G-9
2014-17
SEC Approves Amendments to MSRB Rule G-3 regarding Continuing Education
FINCEN
2015
Colorado Check Casher Penalized and Put Under Corrective Measures Due to Extensive and Repeated BSA Violations (03/18/2015)
Advisory (FIN-2015-A001) – Guidance to Financial Institutions Based on the Financial Action Task Force Updated Lists of
Jurisdictions with Strategic Anti-Money Laundering and Counter-Terrorist Financing Deficiencies. (03/16/2015)
FinCEN Names Banca Privada d’Andorra a Foreign Financial Institution of Primary Money Laundering Concern (03/10/2015)
FinCEN Fines Trump Taj Mahal Casino Resort $10 Million for Significant and Long Standing Anti-Money Laundering Violations
(03/06/2015)
FinCEN Penalizes Pennsylvania Bank for Failing to Report Suspicious Activity Tied to Judicial Corruption (02/27/2015)
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ACA BROKER-DEALER NEWSLETTER | APRIL 2015
11
2014
FinCEN Assesses $1 Million Penalty and Seeks to Bar Former MoneyGram Executive from Financial Industry (12/18/2014)
FinCEN Penalizes Florida Credit Union for Significant Bank Secrecy Act Violations (11/25/2014)
FinCEN Statement on Providing Banking Services to Money Services Businesses (11/10/2014)
Important Dates
2015 Annual Audit Reports
Fiscal Year
March 31, 2015
April 30, 2015
Supplemental Inventory Schedule (SIS)
Due Date
June 1, 2015
June 29, 2015
Quarter Ending
April 30, 2015
Form Custody Filings
2015 Quarterly FOCUS Part II/IIA Filings
Quarter Ending
June 30, 2015
Quarter Ending
June 30, 2015
Due Date
July 24, 2015
2015 Monthly/Fifth FOCUS Part II/IIA Filings
Period Ending
April 30, 2015
Due Date
May 26, 2015
Due Date
July 24, 2015
2015 4530/Customer Complaint Filings
Quarter Ending
2nd quarter 2015
Due Date
July 15, 2015
2015 Short Interest Reporting Deadlines
SSOI Filings
Quarter Ending
June 30, 2015
Due Date
May 29, 2015
Due Date
July 29, 2015
Settlement Date
April 30
May 15
Due Date
May 4 – 6 p.m.
May 19 – 6 p.m.
Exchange Receipt Date
May 11
May 27
Annual Schedule I Filings
PeriodDue Date
2015 January 27, 2016
ACA Compliance Group’s Broker-Dealer Services Division provides assistance
to compliance professionals to meet regulatory requirements. ACA’s services include
compliance program development, trading reviews, conflicts of management analysis,
corrective action assessments, supervisory control and anti-money laundering testing,
assistance with written supervisory procedures, initial and continuing help with
membership applications, and customized regulatory and compliance consulting.
acacompliancegroup.com
Please contact Dee Stafford at (310) 322-8840 or dstafford@acacompliancegroup.com
to learn how ACA provides initial and ongoing assistance that helps firms meet compliance
requirements consistently.