The Strategic Initiatives Group of FINRA Enforcement publicized its recent inquiry into broker-dealer services involving customers of financial institutions - i.e., federal and state-chartered banks, S&L associations, savings banks, credit unions, the service corporations of such institutions.  The review principally covered a 2-year period. from 1/1/08 to 4/15/10.  Here's what examiners requested in the targeted examination (October):

1. Provide copies of all networking and brokerage affiliate arrangements for the Firm - defined as a contractual or other arrangement between a member and a financial institution pursuant to which the member conducts B/D services for customers of the financial institution and the general public on the premises of such financial institution where retail deposits are taken.”

2. Detailed description of all sales contests, cash and non-cash incentives, other promotions, programs and initiatives directed at obtaining securities business from financial institution customers that affected the compensation of the sales force and/or management of the Firm or bank associates.

3. Detailed description of methods used to solicit securities business from existing customers of financial institutions, including, but not limited to, a description of those methods and/or practices that relate to recommendations arising from or relating to maturation of any cash equivalent products held by existing or prospective customers of financial institutions.  Including:  opening securities accts;  requesting or encouraging securities purchases or services;  qualifying customers for accts;  extending invitations to securities-related presentations;  inquiring whether the person wishes to discuss investments with an RR;  determining whether prospective securities customers wish to receive securities literature from the firm.

4.  Describe all customer information sharing arrangements between the Firm and financial institutions.

5.  Describe all training and educational programs conducted by the Firm that were given to bank and Firm employees re: B/D services conducted on the premises of a financial institution.

6.  Copies of all ads, sales lit., and institutional sales material concerning or referring to “cash alternatives,” including but not limited to, documents available on the Firm’s website.

7. Copies of all presentation material, marketing material, and training material re: “cash alternatives” that were provided to RR's of the Firm.

8. Samples of communications sent to financial institution customers soliciting, promoting, or providing information on securities services of the Firm.

9. Samples of disclosures to financial institution customers and written acknowledgment from these customers re: their understanding that B/D products offered are not products of the financial institution.

10. For financial institution customers who opened accounts at the Firm, provide an e-list of all customer complaints and arbitration/litigation claims received during the review period, including, but not limited to, the following:
         1. Date of activity;  2. Date of complaint;  3. Customer name;  4. Age;  5. Name of RR of record;  6. Product type(s);  7. Allegations;  8. Amount in dispute; and  9. Status of complaint (pending, settled, denied).

11. Copy of the Firm’s WSP's, compliance manuals, branch manuals in effect during the review period re: securities services on the premises of financial institutions and financial institution customer solicitation activities.

12.  List of each type of exception, surveillance or risk monitoring report used by Firm to monitor financial institution customer solicitation activity - with detailed explanations addressing, among other things, how often the report is run, activity the report is designed to monitor, and manner in which the data is gathered, interpreted and used by the Firm.  In addition, provide a sample of each type of exception report identified above for December 2009.

13. If no exception or surveillance reports are utilized, provide detailed explanation of the reviews conducted to monitor financial institution customer solicitation activities.

14.  Copy of Firm’s internal audit procedures, modules, and checklists as they relate to Firm’s review of branches located on the premises of a financial institution and copies of the most recent financial institution branch audits for the top 3 offices.