Regulatory Compliance E-newsletter – February 2018

Feature of the Month

FINRA 360 Offers a Comprehensive Resource for Firms

As a commitment to continuous improvement, FINRA designed a top-to-bottom, left-to-right, inside-out, and outside-in self-evaluation called FINRA 360.

FINRA President and CEO Robert Cook began his tenure in 2016 with a cross-country listening tour where he met with internal staff, member firms, investor advocates, and other regulators to answer the questions, “What does FINRA do well, and how can we improve?” Through the Organization Engagement Initiative, stakeholders were also given the opportunity to submit feedback to these questions with the submission of a Special Notice on Engagement.

As a result of the feedback evaluation and implementation of the FINRA 360 initiatives, FINRA has implemented changes in the area of:

  • The publication of FINRA’s Financial Guiding Principles and an overview of its 2018 budget
  • The publication of a first-ever report on FINRA Examination Findings
  • Changes to FINRA Advisory Committees
  • Changes to process of engagement with stakeholders through member relations, education, and compliance resources
  • Consolidation of enforcement functions
  • Creation of a new Financial Technology Committee to facilitate discussions on financial technology developments
  • Capital formation rule review
  • Retrospective rule review
  • Small firm helpline
  • Revision of the exam qualification process
  • SIPC simplified filing process
  • Creation of the Regulatory Operations Oversight Committee

Of significance is the first annual Report on FINRA Examination Findings. Through regularly occurring cycle exams, firms are made aware of deficiencies that FINRA examiners find in their compliance programs. Now, firms have access to the findings of other member firms. The summary of observations contained in this reports will help firms further improve their compliance functions based on the experiences of other firms, and better anticipate and address potential areas of concern well before their own cycle exam. The areas highlighted in the 2017 report include:

  • Cybersecurity
  • Outside Business Activities and Private Securities Transactions
  • Anti-Money Laundering Compliance Programs
  • Product Suitability
  • Best Execution
  • Market Access Controls
  • Alternative Investments Held in Individual Retirement Accounts (IRAs)
  • Net Capital and Credit Risk Assessments
  • Order Capacity
  • Regulation SHO
  • TRACE Reporting

Click here for your copy of “2017 Report on FINRA Examination Findings”


In 2018, FIRE will be releasing several new Firm Element CE courses and new FINRA e-Learning courses as they became available. For further information, consult our catalog using this link.

Getting ready to sit for your Licensing Exam? FIRE’s new Mastery Exams test your knowledge of the concepts that will be covered on your FINRA exam. They closely replicate the actual exam experience in terms of content, format, questions and difficulty. Learn more here.

For further information, contact your FIRE sales rep or

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SEC Publishes 2018 Examination Priorities

SEC 2018 Regulatory Agenda

The Securities and Exchange Commission’s Office of Compliance Inspections and Examinations (OCIE) has announced its 2018 examination priorities. OCIE publishes its exam priorities annually to help members improve compliance, supervisory and risk management programs. While these priorities are not exhaustive, the SEC warns that “we expect to allocate significant resources throughout 2018 to the examination of the issues described herein.”

The 2018 priorities closely follow the priorities set out in the OCIE’s 2017 document with the notable additions of (1) Senior Investment and Retirement Accounts and Products (2) Fixed Income Order Execution, and (3) Cryptocurrency, Initial Coin Offerings, Secondary Market Trading and Blockchain.

OCIE’s 2018 examination priorities consist of five major categories, each of which is then divided into a number of sub-categories:

  • Retail investors, including seniors and those saving for retirement
  • Compliance and risks in critical market infrastructure
  • FINRA and MSRB
  • Cybersecurity
  • Anti-money laundering programs.

Retail Investors, Including Seniors and Those Saving for Retirement – The OCIE will prioritize:

  • protection of retail investors — particularly seniors – and products and services directed to them
  • disclosure of cost of investing, including fees and expenses, as well as conflicts of interest
  • supervision of representatives selling products and services to investors, and the execution of customer orders in fixed income securities
  • monitoring the continued growth of cryptocurrencies, initial coin offerings (ICOs), Secondary Market Trading and Blockchain; including providing investors with disclosure about the risks associated with these investments
  • Fixed Income Order Execution and Municipal Advisors and Underwriters.

Compliance and Risks in Critical Market Infrastructure – OCIE will examine service providers whose functions underpin the functioning of capital markets including, clearing agencies, national securities exchanges, transfer agents, and entities that are included Regulation Systems Compliance and Integrity (SCI), which is focused on technology infrastructure of the U.S. securities markers.

FINRA and MSRB – OCIE will continue its oversight of FINRA by focusing examinations on FINRA’s operations and regulatory programs, the quality of FINRA’s examinations of broker-dealers and municipal advisors. OCIE will also evaluate the effectiveness of MSRB’s operations, policies, procedures and controls.

Cybersecurity – OCIE states that the scope and severity of risks from cyber threats have increased dramatically so that examination programs will prioritize cybersecurity with an emphasis on governance and risk assessment, access rights and controls, data loss prevention, vendor management, training, and incident response programs.

Anti-Money Laundering Programs – Examiners will evaluate members’ compliance with anti-money laundering regulatory requirements, as well as comprehensive customer due diligence, timely filing of SARs, and firms’ independent testing of their AML programs.


Prepare yourself for a successful SEC Mock Examination by engaging NRS. Our mock exam will evaluate the ability and preparedness of your firm’s key personnel, processes and records to determine if you will pass muster with the SEC.

Find out more here.

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Certification Explained

In many professions, including financial securities compliance, continually developing the knowledge, skills and attitudes to perform well is both expected and encouraged. The adopting release of the Advisers Act’s Compliance Programs Rules 206(4)-7 notes that “An adviser’s chief compliance officer should be competent and knowledgeable regarding the Advisers Act…

Earning a relevant certification is one path to developing competence and knowledge to both build a knowledge and skills foundation and maintain current knowledge and skills through continuing education or re-certification. However, only certain certifications deliver that double promise of building and enhancing.

The development of a salient certification begins in psychometrics – the science of knowledge measurement. This branch of science helps define, quantify and deliver profession-specific knowledge needed to perform well as a professional, and confirms that knowledge through education and an assessment of a specific level of knowledge. The components of a robust certification include:

  • Judicious and systematic development of professional competencies that can be measured and evaluated by an assessment of appropriate knowledge and skills
  • Comprehensive course of study
  • Continuing education or re-certification to update and maintain the integrity of the profession’s current competencies
  • Motivation to help the candidate excel

Investment adviser certification can bring “competent and knowledgeable” to a more concrete level by adding a measurement of knowledge. What is the value of measuring knowledge and becoming certified? Certification:

  • Clarifies compliance competencies
  • Demonstrates proficiency in investment adviser compliance
  • Acknowledges the heightened role of financial securities compliance, and responds to the growing industry demand for advanced compliance education, nationally recognized professional standards and ethical leadership.
  • Exhibits initiative to achieve and maintain the certification
  • Builds credibility for the professional and the firm through education and an examination that meets nationally accepted examination standards and provides statistical evidence to validate that the examination is fair, measures what it is intended to measure, and provides consistent results.
  • Signals recognition of the professional’s and firm’s commitment to integrity and quality
  • Encourages and supports peer exchange through periodic meetings and communications

Exposure to knowledge and the challenge to think critically are deemed noble and respected by centuries of scholars. Investment adviser firms can take this a step further and support compliance education and certification.


Obtaining the NRS Investment Adviser Certified Compliance Professional (IACCP®) designation, co-sponsored by the Investment Adviser Association (IAA), adds value to you and the firm as it has industry recognition and demonstrates your dedication to the established principles of investment adviser compliance.

Find out more about the IACCP Certification here.

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2018 Compliance To-Do list

What are your 2018 New Year’s Compliance resolutions? Have you made your list?

Making your life easier when it comes to your policies and procedures can help make 2018 a breeze for you. However, that isn’t the only thing you need to work on. The truth is, the Compliance To-Do list keeps getting longer and longer. In addition, according to numerous statistics, including this one from Business Insider, 80% of New Year’s resolutions fail to be lived up to by February.

Below are some of the resolutions the typical Compliance Professional makes:

  • I resolve to…
    • find an easier way to make sure that my policies and procedures are comprehensive, accurate and kept up-to-date all year long
    • fully test my procedures, create follow-up tasks, and document the entire process
    • get a handle on cybersecurity and make sure that my vendors are doing what they should to keep your information safe
    • find a way to keep OBAs current and ensure that your internal records match those in WebCRD
    • improve the communication and advertising review process, eliminate manual processes and save time and effort while tracking, reporting, and securely storing your reviews

If you have already have these resolutions underway, then you are closer than ever to achieving compliance confidence.


ComplianceGuardian has you covered

Your compliance resolutions continue to expand with the dynamics of the industry. Choose a solution that will help you achieve these resolutions through an easy-to-use task management. Firms of all sizes choose ComplianceGuardian to cover their compliance fundamentals, ensuring that they remain compliant in the face of on-going changes.

Find out how ComplianceGuardian can help by going here.

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