1. Supervision of Registered Representatives in a Bank Broker Dealer
FIRMA San Francisco Conference
March 31, 2010

2. Topics of Discussion Regulatory Environment
Creating and Maintaining a Supervisory Hierarchy
Compliance
Evaluating Risk

3. Regulatory Environment
Which Regulators is your firm subject to?
What are the regulatory hot topics?
What is the regulatory requirement surrounding supervision of registered representatives?
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4. Regulatory Perspective
FINRA / NASD Rules 3130, 3010, and 3012 form a complementary supervisory scheme:
Rule 3130 requires a CEO to CERTIFY that the firm has a PROCESS to adopt adequate supervisory polices and procedures.
Rule 3010 requires the establishment of a supervisory system and ADOPTION of adequate Written Supervisory Policies and Procedures.
Rule 3012 requires firms to TEST and verify supervisory procedures; and, if necessary AMEND policies and procedures.

5. Role of a Supervisory Principal
Supervision of the activities of registered representatives
Review and approval of sales activities
Review communications
Ensure that all registered representatives have required registrations
Ensure that all registered representatives are provided the necessary training
Ensure that branch records are maintained for the required retention period

6. Supervisory Structure
Written Supervisory Procedures
Internal Inspections
Correspondence Review
Transaction Review
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7. Supervisory Hierarchy
Creation of Hierarchy System
Maintaining the Hierarchy
Supervisory Principal Qualifications
How Important is this- Enforcement History?

8. How to Ensure Compliance with Policies and Procedures
Branch/Office of Supervisory Jurisdiction Inspections
Written Supervisory Procedures
FINRA Rule 3012, Heightened and Enhanced Supervision
Surveillance
Documentation
Hiring Registered Representatives and Supervisory Principals
Training
Communication
Flexibility and Willingness to change as your business changes

9. Evaluating Risk
Clear Definition of Types of Risk Specific to Your Business
Use Regulatory Enforcements as a Learning Tool

10. Supervision Trade Review Customer Contact Surveillance Reports
Trainings
Continuing Education
Seminars and Public Speaking Engagements
Gift and Entertainment Policy
Supervisory Structure
Complaints
Hiring
Heightened and Enhanced Supervision
Branch and OSJ Visits
OSJ Inspections
Branch Inspections
Communications with the Public

11. Questions?