BD President Sanctioned for Failing to Manage Back-Office Ops
BD President Sanctioned for Failing to Manage Back-Office Ops (11/16/10)
The SEC has upheld FINRA sanctions and fines against the president of a clearing firm for failing to properly supervise back-office operations. According to FINRA, the respondent oversaw the implementation of a deficient software system and the management of inexperienced personnel. The firm had replaced a working software system with a less-expensive but untested product that could not properly interface with other systems, resulting in failures to meet operational and regulatory requirements. FINRA charged that the respondent focused on his sales responsibilities rather than fixing the operational problems. FINRA rejected the excuse that the software was to blame, stating: "if a broker-dealer or its agent develops a computer-communications system to facilitate regulatory compliance, failure of that system does not excuse the broker-dealer from its obligation to comply with each of its regulatory responsibilities." FINRA alleged violations of Rule 3010 for failing to establish and maintain a supervisory system reasonably designed to achieve compliance with the securities laws.
OUR TAKE: FINRA recognizes when a firm tries to cut corners with inadequate systems and personnel. Rule 3010 transcends compliance and includes supervision of all operations.
Posted by Todd Cipperman at 11/16/2010 6:12 AM 
Categories: Compliance and Operations
Tags: operations systems brokerdealer 3010 supervision
Categories: Compliance and Operations
Tags: operations systems brokerdealer 3010 supervision
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