ACA BROKER-DEALER NEWSLETTER
Transcription
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 ……...… 1 ……...……...…… 2 Changes in Background Checks……...……...……...……...……...……...……...……..3 acacompliancegroup.com Upcoming Events ……...……...……...……...……...……...……...……...……...……...… 9 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. 2 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 3 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. 4 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. 5 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. 6 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. 7 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 9 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) 10 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 [email protected] to learn how ACA provides initial and ongoing assistance that helps firms meet compliance requirements consistently.