Year-End Compliance 

Considerations for Financial Services Firms

Year-End Compliance Considerations for Financial Services Firms


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Full video transcript available below:

Hello, everyone, and welcome to today's webinar, hosted by me, Joe Boyhan of MCO and Jennifer Lin, Partner and Head of the Compliance Group at DLA.

Today's webinar is titled, "Best Practices to Keep your Firm SEC and FINRA Compliant this Season."

So I thought it would be helpful to put in some year end considerations before we wrap up and summarize the webinar. Just some reminders that the Annual Form ADV update is due March 31, 2018. It is recommended that the process for completing the filing begin a little bit earlier, because this form was updated in October and there are some new sections of the firm that most advisors would not be familiar with and it may take a little bit longer for that information to be collated. We've been advising our clients to look at the form, be familiar with the new form, and get an early start this year.

The annual renewal fees are due December 18, 2017. 

Broker reviewers are reminded to complete their annual verification of the FINRA Contact System by January 17, 2018. And also reminders that broker dealers are required to conduct an annual compliance meeting. 

So in conclusion, it is essential that firms understand the rules and industry best practices pertaining to gifts, gratuities, travel, and entertainment, in order to avoid regulatory scrutiny for noncompliance in this area. I think it's important to put some particular focus on corporate bonuses and perks received by the investing public and regulatory communities, so firms are encouraged to test their supervisory system to ensure it is well equipped to prevent, detect, correct potential or actual violations of its customized gift policies. Check your internal controls and verify that your firm's safeguards are capturing relevant data. Educate your associated personnel on the firm's policies and be sure to investigate any red flags if they are detected in order to manage and mitigate risks.

So then in summary, compliance personnel should be mindful of the potential conflicts of interest that surround the giving and receiving of gifts. I just want to remind again some best practices to include in your firm's gifts and entertainment policy.

Designate senior executives as gift and entertainment approvers, who can interpret and make decisions based on the company's business model and any potential conflicts. Implement a value threshold and if and when a gift surpasses that price point, it needs to be escalated and proved by the designated executive. Implement a widespread tracking system, in plain technology software, to record all gifts and entertainment that are given and received. Having a pre-approval process for any gifts to a government official. Compliance officers and other senior executives can provide that approval. Then I'd also consider capping the amount of gifts given to a single individual in a year. Similarly, capping the amount of gifts an employee can accept. Lastly, prohibiting the giving of gifts and receiving of cash gifts and anything that could impact a business decision, such as obtaining or retaining a business advantage, I think, is crucial to any gifts and entertainment policy and procedure.



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