Avoid Failure to Supervise Claims

Create Evidence of Supervision

Some of the best practices employed by compliance professionals who avoid failure to supervise allegations, is to consistently document their supervisory efforts. These professionals will have a system of documenting, (and retrieving), meeting notes, conversations, red flags, investigations, and follow-up activities. All in an effort to provide verification of how they satisfied the supervisory requirements delegated to them.

One common method of creating evidence of Supervision, is in a firm’s surveillance program. By utilizing exception reports, a supervising principal can use these reports to create evidence of supervision. This month’s newsletter is an excerpt from our Firm Element CE course, Supervision & Surveillance, which provides a review of the most common types of exceptions reports, along with what these reports could indicate.

About the Course

Supervision & Surveillance covers FINRA Rule 3110, Supervision (effective December 2014), which applies to supervision and supervisory control systems. It discusses surveillance tools that can help a firm and its supervisory employees stay on the right side of the regulators and provide the best client experience.

The course also provides an overview of responsibilities for creating a compliance system with a risk management process that protects a firm from violations, fines, and fraud. It details ways in which policies, procedures, and reports are used to effectively supervise registered representatives and to create a culture of compliance by identifying patterns and trends that pose a risk to the firm and to clients.

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