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NEWSLETTERS & ALERTS
An ‘Imprecise’ WSPs Manual Leads to Registration Problems
by Howard Haykin
Between March 2014 and June 2019, Precision Securities failed to appropriately qualify and register 2 associated persons who engaged in securities trading activity. Both individuals were qualified and registered as Series 7 General Securities Representatives. However, one took agency orders from clients and executed them on Precision’s Order Management System (“OMS”) platform, while the other routed orders for clients through the Firm’s OMS. As such, both needed to be registered as Equity (or Securities) Traders.
SPECIFYING ‘WHO WHAT WHERE WHEN WHY and HOW’. Once again, a broker-dealer has been dinged for not being specific enough in its WSPs. Precision Securities addressed the WHO, the WHAT, and the WHY issues by designating the Chief Compliance Officer (“CCO”) as being responsible for ensuring that "associated persons obtained the required registration and licensing prior to the commencement of work.” And the WSPs further required the CCO to conduct and document internal reviews regarding registration, including to “ensure” that all supervisory personnel and principals were qualified for their duties.
Yet, the WSPs failed to address the WHAT, the WHEN, and the HOW issues by not specifying the process, method, or frequency for the CCO’s reviews for registration compliance. As such, Precision’s WSPs failed to specify a process or method through which the Firm would reasonably monitor for and effectively review whether its associated persons were appropriately qualified and registered for their activities and duties, in compliance with applicable requirements.
[For further details on the above case, click on … FINRA Case #2018057166401.]