Published on:

NASAA Identifies Top Broker-Dealer Compliance Violations

The North American Securities Administrators Association (“NASAA”), an international association devoted to investor protection, recently released a report based upon its investagotorty findings regarding the top broker-dealer compliance violations. NASAA, with assistance and guidance from its Broker-Dealer Operations Project Group, compiled data received through examinations conducted by state securities examiners, from January 1, 2012 to June 30, 2012, in twenty-four (24) jurisdictions across the United States. The results of this examination, which surveyed a total of five (5) compliance areas including: (1) supervision; (2) sales practices; (3) registration and licensing; (4) operations; and (5) books and records, revealed a total of 453 different types of violations.  Approximately half of the examinations involved a one-person branch office and an estimated eleven percent (11%) of the other examinations involved branch offices with more than five (5) agents.  The top five types of violations concerned: (1) failure to follow written supervisory policies and procedures; (2) suitability; (3) correspondence/e-mail; (4) maintenance of customer account information; and (5) internal audits. Based on these findings, NASAA offered a series of recommended “best practices” for broker-dealers to consider in addressing internal compliance challenges.  These recommendations focus on firm practices regarding the reporting of customer complaints, broker identification of client suitability and the firm enforcement of written supervisory procedures.  A complete list of NASAA’s recommended practices, as well as NASAA’s complete report, can be found here. At Lax & Neville LLP, we represent securities industry professionals and broker dealers in various regulatory defense matters. Please contact our team of attorneys for a consultation at (212) 696-1999.

Contact Information