welcome remarks: chip jones, finra member relations and education tuesday, october … ·...

© 2018 Financial Industry Regulatory Authority, Inc. All rights reserved. 1

Welcome Remarks: Chip Jones, FINRA Member Relations and Education Tuesday, October 9 9:00 a.m. – 9:15 a.m.

Speaker: Chip Jones Senior Vice President FINRA Member Relations and Education Speaker Biography: Chip Jones is Senior Vice President of Member Relations and Education for FINRA. In leading the Member Relations and Education Department, Mr. Jones’ responsibilities include maintaining and enhancing open and effective dialog with FINRA member firms. Mr. Jones also oversees FINRA’s Member Education area, which includes FINRA conferences and other member firm educational offerings such as the FINRA Institute at Georgetown for the Certified Regulatory and Compliance Professional (CRCP)® designation. Prior to joining FINRA, Mr. Jones spent six years as Vice President of Regulatory and Industry Affairs at American Express Financial Advisors (AEFA). Previous to AEFA, he spent two years as Advocacy Administrator for the Association for Investment Management and Research (AIMR). Mr. Jones was employed by the Virginia Securities Division as a senior examiner/investigator prior to joining AIMR.

Disclosure Reporting, Monitoring and Registration ConferenceOctober 9, 2018 | New York, NY

Welcome Remarks: Chip Jones, FINRA

Member Relations and Education

FINRA Disclosure Reporting, Monitoring and Registration Conference | © 2018 FINRA. All rights reserved.

Speaker

Chip Jones, Senior Vice President, FINRA Member Relations

and Education

Panelist

1


Regulatory Reporting Requirements Tuesday, October 9 9:15 a.m. – 10:15 a.m. This session focuses on regulatory requirements and firm practices related to reporting and disclosure. FINRA panelists highlight key reporting requirements, including requirements for maintaining Forms U4 and U5, and customer complaint reporting obligations.

Moderator: Mario DiTrapani Vice President FINRA CRD/Public Disclosure Panelists: Sean Driscoll Director, Registration, Global Employee Trading and Outside Activities Credit Suisse Wendy Lanton Chief Operations and Chief Compliance Officer Lantern Investments, Inc. Ronald Peterson Senior Director FINRA Regulatory Review and Disclosure


Regulatory Reporting Requirements Panelist Bios: Moderator: Mario DiTrapani is Vice President, FINRA, Registration and Disclosure (RAD), which is responsible for the operation of the Central Registration Depository (Web CRD®), the Investment Adviser Registration Depository (IARDTM) and FINRA BrokerCheck®. His current management responsibilities encompass the following RAD units: Regulatory Services and Operations, Regulatory Review and Disclosure, Quality Control and Communications. Mr. DiTrapani also serves as chair to FINRA’s Licensing and Registration Council, an ad hoc committee that advises and consults with FINRA staff regarding a broad range of issues relating to the licensing and registration of financial services firms and their associated persons. Mr. DiTrapani began his tenure with FINRA in 2006 as part of NASD, which consolidated with the NYSE Member Regulation in 2007 to form FINRA. Mr. DiTrapani also currently serves on the Securities and Insurance Licensing Association’s (SILA) Board of Directors as a Regulatory Advisor. Prior to joining FINRA, he was Senior Vice President and Deputy Director of Compliance for UBS Financial Services Inc., where he oversaw registration, insurance licensing, regulatory reporting, outside accounts, and outside business activities. Mr. DiTrapani also served as President of the Association of Registration Management (ARM). He has been a financial services industry professional for more than 35 years and has served on various industry/regulatory committees focusing on registration and qualifications issues. Mr. DiTrapani holds a Bachelor of Business Administration degree in Finance and Investments from the Bernard M. Baruch College of the City University of New York. Panelists: Wendy Lanton has been in the financial services industry for more than 25 years. She is one of the founding principals of Lantern Investments, a FINRA registered broker dealer, and Lantern Wealth Advisors, an SEC registered investment advisor. She has been the Chief Compliance Officer of Lantern Investments since its inception in 1993. The firm has multiple business lines and currently has 46 registered representatives and operates 13 branch offices across the country. Ms. Lanton is responsible for both the firm’s compliance and the day-to-day operations. In December 2015 she was appointed to the FINRA Small Firm Advisory Committee and presently serves as the committee’s chairperson. She also currently serves on the Steering Committee for her firm’s current clearing firm and was the co-chairperson on the steering committee at her previous clearing firm. As a steering committee member, her industry experience is called upon to help direct both compliance and technology resources. Ms. Lanton has also served as the chairperson for multiple Compliance Forums for retail brokerage firms. She is a frequent panelist/speaker at FINRA conferences. Her industry perspective is called upon to discuss topics such as Anti-Money Laundering, Top Regulatory Concerns and Effective Risk Based Examinations. In February 2016 Ms. Lanton served as a panelist representing small firms at the Cybersecurity Conference. She has written numerous compliance-centric articles focusing on topics ranging from client suitability to cyber-security. Ms. Lanton graduated from George Washington University where she majored in International Finance. Ron Petersen is Senior Director of Regulatory Review and Disclosure, FINRA, RAD. In this role, he oversees staff responsible for individual and organization disclosure review, statutory disqualification, expungement, as well as U6 filings for FINRA, SEC and CFTC/NFA. Prior to joining FINRA (then NASD) in 2001, Mr. Petersen was an Examiner with the Colorado Securities Division, where he established the state’s investment adviser registration and examination programs and oversaw the registration and regulation of local government investment pools managing more than $1.5 billion in assets. He also previously served as RAD’s primary liaison with other securities regulators and supervised the department’s Regulatory User Support Desk, which serves as a front-line resource for the SEC, SROs and state securities commissions. Additionally, he was the Director of the Registration Management unit, during which he oversaw the operation of the FINRA Disciplinary Actions Online database, CRD Accounting, Research and the annual Renewal Program. He received a Bachelor of Music Education degree from Capital University in Columbus, Ohio, and an MBA in Finance from the University of Colorado at Denver.


Regulatory Reporting Requirements


Moderator

Mario DiTrapani, Vice President, FINRA CRD/Public Disclosure

Panelists

Sean Driscoll, Director, Registration, Global Employee Trading

and Outside Activities, Credit Suisse

Wendy Lanton, Chief Operations and Chief Compliance Officer,

Lantern Investments, Inc.

Ronald Peterson, Senior Director, FINRA Regulatory Review

and Disclosure

Panelists

1


Uniform Forms

Form U4 – Other Business

Forms U4/U5 Customer Complaint Questions

Form U5 – Disclosure Certification Checkbox

FINRA Rule 3110(e)

Forms U4 & U5 Filing Tips

Topics of Discussion

2


Uniform Form Types

Form U4 to register an individual

Form U5 to terminate an individuals registration

Form U6 filed by a regulator to report a regulatory action

Form BD to register an entity as a broker-dealer

All uniform forms must be amended within 30 days of an event or proceeding which

renders a previous response inaccurate or incomplete. Exception: Events triggering

Statutory Disqualification must be reported, via an amended Form U4, within 10 days.

Form BD Disclosure questions also apply to control affiliates and control persons.

Certain events are reportable on Forms U4 and U5, but are not reportable on Form BD.

Examples include Wells Notice and customer complaints and arbitration claims.

Individual and Broker-Dealer Disclosures

3


RRs currently engaged in any other business as a proprietor, partner, officer, director, employee, trustee, agent or otherwise, must disclose that on Form U4 (item # 13). Remember to include the following information:

Name and address of the business,

Whether or not it is investment-related,

Nature of the business,

Your position, title or relationship,

Start date,

Approximate number of hours/month devoted to the business,

Number of hours you devote during securities trading hours, and

Briefly describe your duties

For the purpose of Form U4, please exclude non-investment-related activity that is exclusively charitable, civic, religious or fraternal and is recognized as tax exempt.

Form U4 – Other Business

4


“Subject of” an arbitration/civil litigation – RRs are required to report sales practice related claims that do not name them as a party, but whose conduct was the cause of the claim.

All complaints involving forgery, theft, misappropriation or conversion of funds or securities are reportable, regardless of dollar amount.

If a written customer complaint does not allege a specific dollar amount, it must be reported unless the firm can determine that the damages are less than $5,000.

Verbal customer complaints are only reportable if they result in settlement of $15,000 or more.

Settlement is the total amount paid to customer to resolve dispute – not just the RR’s contribution.

Forms U4 & U5 Customer Complaint Questions

5


Allows firms to apply the disclosure towards satisfying its

4530(a)(1) reporting obligation

Disclosure Reporting Page (DRP) 4530 checkbox

6


By checking the box the firm certifies that:

– There is no additional information to be reported at this time

– Firm acknowledges it will update information, as appropriate.

Form U5 Disclosure Certification Checkbox

7


“To Hire or Not to Hire, THAT is the Question”

HR and Business Coordination All results are communicated to HR and Hiring Manager

What are Compliance Concerns?

Obtain documents, records, statements

Review Employment Application

Review and Evaluate Outside Activities for conflicts

Review Role/Registration Requirements

Advise of Risks

Agree to Disagree? Assume Risks?

Coordination with HR and Hiring Manager

8


On July 1, 2015, FINRA Rule 3110(e) went into effect requiring firms to validate the information reported on Form U4.

The validation required, at minimum, a search of public records to be conducted by the member or third-party vendor (the fingerprint process validates the criminal disclosure questions).

In late 2014, through the use of a vendor, FINRA conducted financial public record searches to validate the bankruptcy, judgment and lien question on Form U4.

Since FINRA was already performing the financial public record searches, FINRA announced that it would perform these searches on behalf of industry upon submission of Form U4 (see Information Notice dated May 18, 2018).

This process, which officially kicked off on July 9th, provides a huge savings to industry since they no longer have to contract third-party vendors to perform these financial public record searches.

Enhanced Public Records Review

9


CRD Pre-Hire Check

All persons seeking employment in a registered capacity or an indication they once held a registration should be reviewed through the performance of a CRD Pre-hire Check.

Best practice is to perform CRD Pre-hire Checks on all candidates

Authorization to search CRD to conduct the Pre-Hire Check must be provided by the candidate through a written consent form

CRD Snapshots and/or full screens prints are reviewed to assist in the determination to hire

All documents, approvals to perform the CRD Pre-Hire check, and resulting decision should be maintained for books and records and documentation purposes

Vendor Background Checks

Member firms will often use vendors to provide investigative reports for the purposes of performing background checks*

Firms will often determine the depth and scope of a report that best meets its compliance and business requirements

Full U.S. review or partial

Include all forms of financial/credit

Include education search

Employment

Criminal

Industry Perspective -- Background Checks

10


Site Map

Outstanding Disclosure Letters (1 of 3)

11


Display Queue


12


Queue Results


13


Congratulations!! You Passed. . . . . Now What??

The maintenance and the accuracy of Registration information is everyone’s responsibility! Policies and Procedures for ensuring the accuracy

Controls, Reports, Surveillance

Reporting Obligations

Continuing Education – Regulatory and Firm Element

Continued Background Checks and Searches

Monitoring Broker Check and CRD Queues/Notifications

Notifying New Manager of RR History

RR responsibility does not end at the passing of the exams and the providence of approvals

Life After Approvals – This is just the beginning. . . .

14


What to look out for….

Disclosure and Fingerprint Reviews

• Customer Complaints, Arbitrations, Criminal Litigations

• 3 or more in 5• Compensatory Damages/Settlement

Amounts• Individual Contribution Amount• Awards/Dismissal• SD Review/Status (10 Years)• Type of allegations/disposition• States/SROs Registration Requirements

Regulatory – State, Federal, SRO

• Types of Violations (Willful)

• Suspensions/Revocations

• Heightened Supervision

• Limited Activities

Financial

• Bankruptcies; Liens; Judgments

• Status

• Number/Type of actions

• State Registration Requirements

• Job description

Employment; Exam and CE Records

• Employment with several Firms

• Length of Service

• Outside Activities

• Exam – Qualified for Role?

• CE Compliance History

15


Reports Tab

Reports (1 of 2)

16


Reports (2 of 2)

17


Allows RRs to review their CRD records.

Enable former RRs the ability to change their residential

address on file in CRD.

Links directly to the Continuing Education (CE) Online to

complete continuing education requirements.

Links directly to the Prometric website to schedule exams.

View and print a copy of your latest Form U5 filed by your

previous employer.

Financial Professional Gateway

18


Query Web CRD right before submission of U4 to ensure disclosure is accurate, even if a pre-hire was done earlier.

Whenever possible (Initial/Transfer), submit and track fingerprints prior to submission of U4.

Obtain criminal history and credit reports (optional) prior to filing.

If regulatory actions exist, especially state actions, documents may be required for review for SD under Sarbanes-Oxley.

Require periodic certification from RRs that U4 disclosure is accurate.

Sign up for automatic email notifications.

Track pending disclosure.

If all required disclosure is submitted on the initial U4, no late disclosure fee will apply no matter how old the events are.

Compliance Tips

19


Uniform Forms (U4/U5 and Explanation of Terms): www.finra.org/file/explanation-terms-crd-forms

Forms U4 and U5 Interpretive Questions & Answers (as of 03/05/15): www.finra.org/CRD/u4u5faq/

U4/U5 Revisions: Reg. Notice 09-23: www.finra.org/Industry/Regulation/Notices/2009/P118706 Electronic Filing Requirements for Uniform Forms: Reg. Notice 09-40:

www.finra.org/Industry/Regulation/Notices/2009/P119432 U5 Obligations: Reg. Notice 10-39: www.finra.org/Industry/Regulation/Notices/2010/P122041 Regulatory Notice 15-05: www.finra.org/industry/notices/15-05 Information Notice – 05-18-18: www.finra.org/industry/information-notice-051818 Financial Professional Gateway: www.finra.org/industry/features-financial-professional-

gateway Protecting Personal Information in Registration Form Filings (from FINRA.ORG):

www.finra.org/industry/web-crd/protecting-personal-information-registration-form-filings

Disclosure Reporting Key Resources

20

http://www.finra.org/file/explanation-terms-crd-forms

http://www.finra.org/CRD/u4u5faq/

http://www.finra.org/Industry/Regulation/Notices/2009/P118706



http://www.finra.org/industry/notices/15-05

http://www.finra.org/industry/information-notice-051818

http://www.finra.org/industry/features-financial-professional-gateway

http://www.finra.org/industry/web-crd/protecting-personal-information-registration-form-filings


Regulatory Reporting Requirements Tuesday, October 9 9:15 a.m. – 10:15 a.m.

Resources FINRA Resources

Uniform Forms (U4/U5 and Explanation of Terms)

Website: www.finra.org/file/explanation-terms-crd-forms

PDF: www.finra.org/sites/default/files/AppSupportDoc/p468051.pdf

Forms U4 and U5 Interpretive Questions & Answers (as of 03/05/15)

Website: www.finra.org/CRD/u4u5faq/

PDF: www.finra.org/sites/default/files/Interpretive-Guidance-final-03.05.15.pdf


www.finra.org/industry/features-financial-professional-gateway

Protecting Personal Information in Registration Form Filings (from FINRA.ORG)

www.finra.org/industry/web-crd/protecting-personal-information-registration-form-filings

FINRA Notices

Information Notice: Enhancements to FINRA’s Disclosure Review Process Relating to Public Financial Records (May 2018)

www.finra.org/sites/default/files/notice_doc_file_ref/Information-Notice-051818.pdf

Regulatory Notice 15-05, SEC Approves Consolidated FINRA Rule Regarding Background Checks on Registration Applicants (March 2015)

www.finra.org/sites/default/files/notice_doc_file_ref/Notice_Regulatory_15-05.pdf

Regulatory Notice 10-39, Obligation to Provide Timely, Complete and Accurate Information on Form U5 (September 2010)

www.finra.org/sites/default/files/NoticeDocument/p122040.pdf

Regulatory Notice 09-40, SEC Approval and Effective Dates for New Consolidated FINRA Rules on Electronic Filing Requirements for Uniform Forms and Arbitration Disclosures (July 2009)


http://www.finra.org/file/explanation-terms-crd-forms

http://www.finra.org/sites/default/files/AppSupportDoc/p468051.pdf

http://www.finra.org/CRD/u4u5faq/

http://www.finra.org/sites/default/files/Interpretive-Guidance-final-03.05.15.pdf

http://www.finra.org/industry/features-financial-professional-gateway

http://www.finra.org/industry/web-crd/protecting-personal-information-registration-form-filings

http://www.finra.org/sites/default/files/notice_doc_file_ref/Information-Notice-051818.pdf

http://www.finra.org/sites/default/files/notice_doc_file_ref/Notice_Regulatory_15-05.pdf

http://www.finra.org/sites/default/files/NoticeDocument/p122040.pdf



Regulatory Notice 09-23, SEC Approval of Proposed Changes to Forms U4 and U5 and FINRA Rule 8312 (FINRA BrokerCheck Disclosure) (May 2009)




New CRD® —Transforming the Registration and Licensing Experience

Tuesday, October 9 10:30 a.m. – 11:30 a.m. FINRA has begun a multi-year initiative to transform the CRD system. During this session, FINRA business and technology staff cover the upcoming changes, significant feature releases, how your firm can participate during product development, and answer your questions about the future of this important system.

Moderator: William Swanstrom Vice President, Registration & Disclosure Business Services FINRA Registration and Disclosure's Business Development and Innovation Panelists: Noah Egorin Product Manager and Senior Director FINRA Registration and Disclosure's Business Development and Innovation Deepa Parasuram Director FINRA Registration and Disclosure Technology


New CRD® —Transforming the Registration and Licensing Experience Panelist Bios:

Moderator: Bill Swanstrom, Vice President, FINRA Registration and Disclosure, leads business development, innovation and strategic initiatives that leverage RAD’s licensing systems and business services as well as overseeing the Gateway Call Center. Mr. Swanstrom’s focus is on outreach and expanding the role and impact that member firms have when it comes to licensing and registration systems and services. The new CRD system and Financial Professional (FinPro) Gateway are opportunities to leverage technology, respond to industry challenges and introduce a more effective licensing platform. These systems will focus on enabling firm compliance, reducing administrative burden, simplifying requirements and improving the overall user experience. Throughout his tenure, Mr. Swanstrom sponsored the development, deployment and operation of the Nationwide Multistate Licensing System on behalf of FINRA for The Conference of State Bank Supervisors (CSBS). In addition, he has led numerous support consolidation initiatives to improve efficiency and expand the customer support model introducing improved access to information and enhanced communication channels for the Gateway Contact Center. The Gateway Contact Center staff includes the front-line responders for member firms, investors, compliance professionals, and the general public regarding compliance and registration questions, navigational support, and investor questions. The systems supported include: Web CRD, IARD, BrokerCheck, Firm Gateway, FinPro, Account Administration, E-Bill, OATS, and eFOCUS among others. He holds a Bachelor’s degree from Towson University in Political Science. Panelists: Noah Egorin is Product Manager and Senior Director in FINRA’s Registration and Disclosure’s Business Development and Innovation Unit. His primarily areas of responsibility is leading FINRA’s effort to modernize and transform the products the industry utilize for meeting registration and disclosure obligations. Mr. Egorin is also focused on utilizing FINRA’s information, analyses, and unique role to create new products that benefit the financial services industry. Prior to taking on his current role, Mr. Egorin led FINRA’s Firm Compliance Tools unit. He has focused on developing tools to assist broker-dealers with compliance activities. His efforts have focused on compliance tool offerings associated with variable annuity exams, mutual funds, and municipal bond disclosure. In this role, Mr. Egorin had responsibility for the FINRA Report Center (and associated Report Cards), FINRA’s Online Manual, and other interactive tools. Mr. Egorin has also supported FINRA’s efforts to syndicate investor education materials and developing data interfaces for FINRA systems. Prior to joining FINRA, Mr. Egorin served as Group Manager for the Product Planning practice of the Adrenaline Group, a Washington, DC-based consulting firm that assisted firms with commercial product development, and also spent time as Program Manager on the Microsoft Office team in Redmond, WA. Mr. Egorin holds a BS in Computer Science from Washington & Lee University. Deepa Parasuram, Director of FINRA Registration and Disclosure Technology, is responsible for all the Registration & Disclosure applications namely Web CRD, IARD, PFRD, Web EFT and other related products such as the Financial Professional Gateway. Ms. Parasuram began her tenure with FINRA (then NASD) in 2003 as a quality assurance analyst. Since then she has held positions of progressively increased responsibility supporting these programs as a business analyst and currently as a product manager. Ms. Parasuram has a Bachelor of Science degree in Engineering from the University of Mumbai, India, and an MS in Computer Science from Johns Hopkins University.


New CRD® — Transforming the

Registration and Licensing Experience


Moderator

William Swanstrom, Vice President, Registration and Disclosure Business Services, FINRA Registration and Disclosure's Business Development and Innovation

Panelists

Noah Egorin, Product Manager and Senior Director, FINRA Registration and Disclosure's Business Development and Innovation

Deepa Parasuram, Director, FINRA Registration and Disclosure Technology

Panelists

1

A New CRD

A modern, cost efficient registration system that

allows FINRA to be responsive to change, support

proactive compliance, enable an ecosystem and

delight all of its users.

Copyright 2018 FINRA

FINRA Disclosure Reporting, Monitoring and Registration Conference | © 2018 FINRA. All rights reserved. 3

Part of our DNAo Dozens of sessions held this year.

Thank you!

o Feedback driving features and priority

12Regulators

62Firms

“FINRA staff are clearly interested in understanding our problems, needs and business drivers. This feels like a different experience and big opportunity for our firm.”

Outreach and Feedback


New CRD landing page for firms

o All “classic” queues now available in a

single inbox, with sophisticated filtering

oCustomizable quick links

oCustomizable favorite reports list

o Export


o U5 Notifications

o Enhanced support for rep editing

Infrastructure

o Establish the foundation for moving to

the cloud and new functionality

4

1,500New CRD visits

35,000FinPro reps

What have we done since last year?


Let’s take a closer look…

5

What’s next?

• Activities dashboard• New views of individuals,

firms and branches• Quick edits• Improved form

experience• Notifications• Bulk actions

Firms

• New CRD landing page for states

• Activities dashboard• New views of

individuals, firms and branches

State Regulators

9

• Enhanced Public Records review support

• Criminal history review review automation

FINRA

Copyright 2018 FINRA



10


Today individuals can:

Access their own information

Collaborate with their firm on updates

Continuing education

See Form U5 (if applicable)

In the future firms can allow:

Signing filings

Initiating registration requests

Receiving notifications and alerts

Attestation of information

Managing required documentation

Paying of FINRA fees directly

FinPro: The Representative’s Home

35



36


U5 available via FinPro

An email notification

is sent when a new U5 is

available


U4 rep edit available via FinPro

No need to send

reference numbers to

reps!


Easy access to continuing education

Single sign-on


Rep-initiated updates

40

Firms control access to FinProfeatures


Scenario:

A rep wants to update her

outside business activities

41


We need your help!

49

How should we move forward?

• What sort of reporting and data access do you need?

• How can we simplify working with CRD and FINRA?

• How do we support your efforts to automate?

• How can we enhance FinPro to ease the compliance burden?

In short, how can we make this transformation effort a leap forward for you?


Q A

50

To provide feedback, keep up-to-date on developments and for further

outreach, visit finra.org/newcrd.

©2018 Financial Industry Regulatory Authority (FINRA). All rights reserved. Materials may not be reprinted or republished without the express

permission of FINRA. Individuals, firms and data mentioned in these materials are fictitious and presented exclusively for the purpose of

illustration or example.

http://www.finra.org/newcrd


Thanks for listening!

51


Qualification Examination Program Restructure and Regulatory Continuing Education (CE) Program Changes Tuesday, October 9 1:00 p.m. – 2:00 p.m. This session provides guidance on FINRA’s exam restructuring initiative. Panelists discuss the consolidated rules, the restructuring of the representative-level qualification examination program and change in the CE requirements for permissively registered individuals. Additionally, panelists discuss recently proposed changes to the vision of the CE Regulatory Element published by the CE Council, and offer practical answers to questions about these program changes.

Moderator: John Kalohn Vice President FINRA Testing and Continuing Education Panelists: Joseph McDonald Senior Director FINRA Testing and Continuing Education Alexandra Toton Associate Director FINRA Testing & Continuing Education


Qualification Examination Program Restructure and Regulatory Continuing Education (CE) Program Changes Panelist Bios: Moderator: John Kalohn is Vice President, FINRA, Registration and Disclosure/Testing and Continuing Education. He leads FINRA’s efforts in the development, maintenance and delivery of the securities industry qualification examinations and continuing education programs. He has more than 20 years of experience in educational measurement and assessments, and extensive experience developing, implementing and managing assessment programs for professional licensure and university admissions. Mr. Kalohn’s prior experiences include service with one of the nation’s largest providers of educational and workplace measurement and research services. He holds a bachelor’s degree from State University of New York, a master’s degree from Wake Forest University and a doctorate from the University of Wisconsin, Madison. Panelists: Joe McDonald is Senior Director in FINRA’s Testing and Continuing Education Department, where he manages the FINRA qualification examination and examination waivers programs. Previously, he was a director in FINRA’s Market Regulation Department. Mr. McDonald has been with FINRA for 20 years. Before joining FINRA, he worked as counsel in the Office of Compliance and Inspections and the Division of Market Regulation at the Securities and Exchange Commission, and as a clerk for an administrative law judge at the Commodity Futures Trading Commission. Mr. McDonald received a bachelor’s degree in psychology from the State University of New York at Stony Brook and a law degree from the American University’s Washington College of Law. Alexandra (Lex) Toton is Associate Director of Testing and Continuing Education, RAD, FINRA, where she co-manages the FINRA qualification examination and client services programs. Ms. Toton has been with FINRA for nine years. Before joining FINRA, Ms. Toton worked in compliance and operations at The Investment Center in Bedminster, New Jersey. Ms. Toton received a B.S. in Business Administration from the Boston University and a M.S. in Finance from Johns Hopkins’ Carey Business School.


Qualification Examination Program

Restructure and Regulatory Continuing

Education (CE) Program Changes


Moderator

John Kalohn, Vice President, FINRA Testing and Continuing

Education

Panelists

Joseph McDonald, Senior Director, FINRA Testing and

Continuing Education

Alexandra Toton, Associate Director, FINRA Testing and

Continuing Education

Panelists

1


Exam Restructuring, the SIE Exam and Registration

Rule Consolidation

CE Program enhancements under consideration by

the CE Council

Agenda

2


The Securities Industry Essentials Exam is now

available.

The representative-level qualification exams have

been restructured – most are now shorter in length.

The registration rules have been consolidated into the

FINRA Rule 1200 Series.

October 1, 2018 Rollout

3


Revised Rep-level Exam Structure

4

SIE Exam

Series

6Series

7

Series 22

Series 52

Series 57

Series 79

Series 82

Series 86/87

Series 99


How many questions? 75

How long do I have? 105 minutes

How long is it good for? 4 years

Can I take it even if I do not work for a firm? Yes

How much does the SIE cost? $60

What is the passing score? 70

SIE – Answers to ‘Essential’ Questions

5


Content areas covered:

Knowledge of capital markets

Understanding products and their risks

Understanding trading, customer accounts and prohibited

activities

Overview of the regulatory framework

SIE – ‘Essential’ Facts

6


Top-offs – ‘Essential’ Facts

7


As of October 1, 2018, FINRA no longer offers the following exams:

Series 11

Series 17/37/38

Series 42

Series 62

Series 72

Candidates for these exams whose 120-day window opened prior to October 1, 2018, will be able to take these exams after October 1, 2018, until their windows close.

Other Features of the Restructuring

8


Most current registrants have received credit for the

Essentials Exam, and it will be valid for 4 years upon

leaving the industry. CRD reflects this.

Registrants who return between 2 and 4 years later will

not need to take the Essentials Exam, only the top-off

exam for the registration position.

Registrants who return more than 4 years later will

need to take both the Essentials and the top-off exam.

Effect on Current Registrants

9


Individuals who applied for registration on or before September 30 will take their exam under the old format (i.e., the 250-question Series 7), even though their exam appointment date is on or after October 1. If they pass, they will receive credit for the SIE.

Individuals who apply for registration on or after October 1 will take the SIE and the revised qualification exam (i.e., SIE + revised 125-question Series 7).

Overlap Period of Old and New Exams

10


Access enrollment system from finra.org

Initially need to create an account to enroll and pay

Access direct link to Prometric appointment scheduling

from enrollment system

Will receive score report at test center

Can also view result in enrollment system

Can pay for exam with credit card or by redeeming voucher

Essentials Exam Enrollment for Individuals

11


Through CRD, there are two options for a firm to

request an enrollment for the Essentials Exam:

Form U4: request a rep-level registration (e.g., GS request

opens SIE and S7 exam enrollments)

Non-Form U4: enrollment system

– Group – upload a list of candidates

– Purchase vouchers – used by candidates to enroll for the SIE

Essentials Exam Enrollment Options for Firms

13


Web CRD has an option for firms to enroll non-registered individuals for the SIE and pay the exam fees from the firm’s Flex-Funding Account.

Non-U4 SIE Enrollment

14


Non-U4 SIE Enrollment (cont.)

15


Firms can use the downloadable templates to create the CSV file and then select for upload.


16


SIE enrollments uploaded and paid for by the firm will be added to the Individuals Enrolled for SIE list.

Once an individual sits for the exam, the same list will be updated with the exam result and score (if applicable).


17


Firms also have the option to purchase SIE vouchers (up to 100 at a time) to provide to individuals who can enroll themselves for the SIE.

Non-U4 SIE Enrollment – Vouchers

18


After vouchers are purchased, firms can download a spreadsheet to obtain the list of voucher codes and track their redemption.


19


Non-U4 SIE Enrollment Reminders

Enrolling an individual for the SIE outside of Form U4 does not by itself create a CRD number for them. A CRD number will be assigned when a filing is made for the individual in CRD.

Non-U4 SIE exam results can be seen in the “SIE Enrollment/Results” link and can also be viewed via the existing Pre-Registration Search feature. However, they will not immediately be part of the individual’s CRD record.

When an SIE-only individual becomes registered, their SIE “Pass” result will then be posted to their CRD record.


20


Firms that pay the Essentials Exam fee are able to

view the individual’s result.

If an individual pays the Essentials Exam fee, the firm

will ONLY be able to view the result when:

Conducting a pre-registration search or

Filing a Form U4 requesting a registration.

Viewing SIE Results

21


The Pre-Registration Search has been enhanced to display individuals that have passed the SIE outside of Form U4.

Pre-Registration Search

22


As of October 1, 2018, CRD shows the following:

For passing test results – indicates that the individual passed

the exam but does not display the test score.

For failing test results – indicates that the individual failed the

exam and displays the test score.

Once an individual passes the exam, the failing results will no

longer be displayed. Only the passing result will be displayed.

Change in CRD Display of Exam Results

23


Why was this change made?

CRD maintains registration information.

FINRA qualification exams determine whether a person has

demonstrated minimum proficiency to act in a registered

capacity.

Exam score is not intended to predict how well a person will

perform in a position (i.e., a person who scores 90 will not

necessarily perform better than a person with a score of 75).

Test scores are not stored in CRD.

Change in CRD Display of Exam Results (cont.)

24


Revised Test Center Exam Results Report – Pass

25


Revised Test Center Exam Results Report – Fail

26


Exam Validity

Exam History has a new field that indicates if a passed/waived exam is still valid for registration purposes, including a future expiration date (if applicable).

SIE Credit

SIE exam credit has been automatically granted to individuals registered within the last 4 years, and displayed in Exam History.

(See sample screenshots on the following slide…)

CRD Exam Views

27


Exam History Samples

#1 – Currently registered individual

#2 – Not currently registered, but exams still valid

#3 – Out of the industry

Exam History

28


FINRA Registration Rule Consolidation

29


FINRA Rule 1200 Series has replaced the NASD and

incorporated NYSE registration rules.

Requires firms to designate a Principal Financial

Officer and a Principal Operations Officer (can be

same person at non-clearing firms)

If not already listed on Schedule A of Form BD with

another title, the Principal Financial Officer and/or

Principal Operations Office must be added.

Consolidated Registration Rules

30


Chief Compliance Officers (CCOs) now have a FINRA Compliance Officer registration requirement – CR (Series 14 exam).

Persons with a General Securities Representative and General Securities Principal (S7 GS and S24 GP) registration can register as a Compliance Officer without taking the Series 14 exam.

On October 1, FINRA automatically granted CR registration to persons with a GS/GP who were listed as the CCO on Schedule A of Form BD.

Chief Compliance Officer

31


Investment Banking Principal (BP) – S79 + S24

Private Securities Offering Principal (PO) – S82 + S24

General Securities Principal (GP) is now limited to S7 + S24

On October 1, FINRA automatically granted the BP to persons holding the IB (S79) and GP registrations.

On October 1, FINRA automatically granted the PO to persons holding the PR (S82) and GP registrations.

New Principal Positions

32


Sample screenshot of individual automatically granted the BP, and GP automatically terminated:

New Principal Positions (cont.)

33


Allows permissive registration of persons engaged in

a bona fide business purpose of a member (i.e., an

associated person)

Expands current NASD rule allowing for permissive

registration of persons performing certain limited

functions (e.g., legal, compliance, internal audit)

Such persons will be subject to a level of supervision

commensurate with their status.

Permissive Registration

34


FSAWP allows an individual working for a financial

services affiliate of a member to receive a waiver of a

qualification exam requirement upon returning to the

member for up to seven years, provided the firm and

the individual satisfy certain criteria.

Financial Services Affiliate Waiver Program (FSAWP)

35


Firm files Form U5 for individual and emails FINRA requesting FSA eligibility (must meet 10/5/1 rule).

FSAWP eligibility request email must include email address for individual.

FINRA notifies individual via email of his/her FSA eligibility and individual’s responsibilities to maintain eligibility, including CE requirement.

Recommended that individual establish a Financial Professional Gateway (FinPro) account

FINRA notifies individual via email of each upcoming CE requirement with a link to enrollment page.

Overview of FSAWP Process

36


When individual returns, firm files Form U4 and an

FSAWP exam waiver request.

FINRA processes waiver request within 30 days

Individual who has successfully maintained eligibility

is granted an unconditional exam waiver

Overview of FSAWP Process (cont)

37


SR-FINRA-2017-007

Regulatory Notices 17-30 and 18-27

Essentials webpage:

www.finra.org/industry/essentials-exam

Exam Restructuring webpage:

www.finra.org/industry/exam-restructuring

Resources

38

http://www.finra.org/industry/essentials-exam

http://www.finra.org/industry/exam-restructuring


CE Program Enhancements under

Consideration by the CE Council

_____

Call for Comments

39


The CE Council is seeking feedback on aspects of the industry’s Continuing Education program.

The CE Council has published a document on the CE Council website (cecouncil.com) that includes a combination of specific ideas under consideration and general areas of inquiry.

Providing comments: FINRA Regulatory Notice 18-26

MSRB Notice 2018-21

Cboe and NYSE are directing potential commenters to the FINRA regulatory notice.

The comment period ends on November 5.

Program Enhancements Under Consideration

40


Communicating regulatory developments to the industry via the Regulatory Element in a timely fashion

Improving coordination between firm and regulatory training programs

Allowing for diverse instructional formats that facilitate the learning of a variety of content

Identifying and reducing redundancy among training requirements and programs

Ensuring all registered professionals in the industry receive adequate training

Enabling previously registered individuals to maintain their qualification status by satisfying continuing education requirements while out of the industry

Considering more defined minimum standards of CE for the industry

Program Review Goals

41


Increased Relevance: Narrowing focus of Regulatory Element to current rule changes and

industry-wide regulatory issues

Limiting an individual’s Regulatory Element session to topics directly pertinent to the individual’s current registrations

Improved Timeliness: Shorter CE session required annually

System Enhancements: Improved reporting and tracking in CRD

Potential for automated notifications in Financial Professional Gateway

Synergy with Firm Element: Communication of Regulatory Element topics

Considerations for Regulatory Element

42


Council Resources: Perceived value of current CE Council resources (e.g., Firm Element Advisory)

Suggestions for additional resources that the CE Council should provide

Typical Firm Element: Amount and variety of training included

Other Training Conducted: Additional training requirements that firms manage

Common credentialing programs with CE requirements that firms support

Access to Firm Element Content: Typical mix of firm-developed and third-party materials used for Firm Element

Value of creating a centralized multiple-provider content catalog

Considerations for Firm Element

43


The CE Council is exploring a recommendation to allow previously registered individuals to maintain qualification status while away from the industry.

Program Considerations: Annual Regulatory Element plus additional CE comparable to Firm Element

Administered and tracked through FINRA systems

CE content targeted to individual’s terminated registrations

Eligibility and Program Duration Considerations: Eligibility requirements: Minimum registration period and good standing

Maximum program participation before needing to requalify

Access to “Catch-Up” CE could replace two-year termination provision.

Maintaining Qualification Status

44


QA


FINRA’s Membership Application Program (MAP) Tuesday, October 9 2:15 p.m. – 3:15 p.m.

Attend this session to hear about FINRA’s Membership Application Program (MAP). Learn how FINRA evaluates proposed business activities of potential and existing member firms, including the applicants’ financial, operational, supervisory and compliance systems. This session provides an overview of the application process, including MAP’s fast track/expedited review process. Panelists also discuss changes to the Membership Rules, including Regulatory Notice 18-06.

Moderator: Alissa Robinson Senior Director FINRA Membership Application Program Panelists: Patricia Dorilio Application Manager, MAP FINRA Member Application Program Linde Murphy Chief Operating Officer and Chief Compliance Officer M.E. Allison & Co., Inc.


FINRA’s Membership Application Program (MAP) Panelist Bios: Moderator: Lisa Robinson serves as Senior Director, FINRA, Membership Application Program group, where she works directly with industry professionals, entrepreneurs and innovators on a wide range of topics, including compliance and regulatory issues, unique/novel products and business models, and large scale restructuring. She offers insight to both internal and external constituents with a focus on policy, risk assessment, mitigation and collaboration. In addition, Ms. Robinson liaises with government agencies on a wide range of topics impacting the broker-dealer community. She is also a member of FINRA’s Digital Asset Policy group. Prior to joining MAP, Ms. Robinson served as an Associate Director in FINRA’s Member Regulation, Sales Practice Department, where she was responsible for the oversight and execution of the District 10 examination plan, including cycle, cause and branch examinations for many member firms. She has participated on several national initiatives, most recently FINRA’s Retrospective Review of the MAP rules. Ms. Robinson has served as a panelist at numerous industry events on topics such as crowdfunding, examinations, supervisory controls and ethics and has presented at FINRA Institute at Wharton. She is a Certified Regulatory and Compliance Professional™ (CRCP™). Ms. Robinson completed the FINRA Excellence in Management Program at Wharton and is a recent graduate of Harvard Kennedy School of Executive Education, Women and Power. Panelists: Patricia Dorilio is Application Manager in the Membership Application Program (MAP) Group at FINRA, a position she has held since January 2014. Ms. Dorilio supervises application review staff in the execution of the examination/application review program, including the collection and analysis of information and documentation to determine applicants’ satisfaction of standards for FINRA membership, and standards for continuation of membership. Before joining FINRA in 2011, Ms. Dorilio was employed in the private sector, and immediately prior to that, was Special Counsel in the Division of Member Firm Regulation at the New York Stock Exchange. She began her career as an Assistant Attorney General in the Securities Bureau of the New York State Attorney General’s Office. Ms. Dorilio earned her J.D. from the Maurice A. Dean School of Law at Hofstra University, and her B.A. in Political Science from Hofstra University. She is a member of the bar of the State of New York. Linde Murphy currently serves as compliance advisor to M.E. Allison & Co., Inc., a full-service broker/dealer and Texas registered investment adviser. Founded in 1946, the firm also provides municipalities with advisory and underwriting services. In 2012, Ms. Murphy joined Presidio Financial Services as they began the CMA process to join M.E. Allison & Co., Inc. Ms. Murphy started her career in investments on a trading desk in Chicago in 1999 and has held positions in compliance, sales, business development and management. In addition to the pertinent industry licenses, Ms. Murphy obtained the CRCP™ designation in 2014 after attending the FINRA Institute at Wharton on the FINRA Small Firm scholarship. She currently serves on the FINRA Small Firm Advisory Committee and the District 6 Committee. Ms. Murphy served on the FINRA Fixed Income Committee as well as the FINRA Regulatory Advisory Committee.


FINRA's Membership Application Program

(MAP)


Moderator

Alissa Robinson, Senior Director,FINRA Membership

Application Program

Panelists

Patricia Dorilio, Application Manager, MAP, FINRA Member

Application Program

Linde Murphy, Chief Operating Officer and Chief Compliance

Officer, M.E. Allison & Co., Inc.

Panelists

1


Under the “Schedule” icon on the home screen,

Select the day,

Choose the FINRA's Membership Application Program

(MAP) session,

Click on the polling icon:

To Access Polling

2


Structure and Scope of MAP

Materiality Consultations

FINRA’s “Fast Track” Program

Continuing Membership Applications (CMA’s)

Rule Proposals Impacting MAP

Presentation Overview

3


Centralized Group

Team reports in to common management

Collaborative process between MAP and District staff

Inclusion of other internal FINRA Departments as needed

Not just applications

Structure and Scope of MAP

4


1. Have you filed a MAP matter in the past 12 months?

If so, did you file a:

a. NMA (new membership application)

b. CMA (continuing membership application)

c. Materiality Consultation

Polling Question 1

5


NASD Notice to Members 00-73 describes, among other subject matter,

criteria for evaluating materiality

Any written request for staff’s opinion should identify all relevant facts and circumstances regarding the proposed activity, including:

Nature of the proposed expansion;

Relationship, if any, between the proposed activity and the firm’s existing business;

Effect the proposed change will have on the firm’s capital;

Qualifications and experience of firm personnel; and,

Impact to existing financial, operational, supervisory and compliance systems.


6


How to submit and what to provide

Firm Gateway

Explain the proposed business and support why you believe the change is not material

– Provide an analysis of the firm’s current business and explain why you believe the new business is similar based on criteria in NTM 00-73-See slide 5!

Processed quickly (in most cases)

The assessment is FREE!


7


2. For those that filed a materiality consultation, was

your request deemed “material”?

a. Yes

b. No

Polling Question 2

8


What is Fast Track?

Provides expedited review of low risk, less complex, near-

complete matters,

Abbreviated time frames,

Average time to decision.

FINRA’s Fast Track Process

9


3. For those that filed a MAP matter in the past 12

months, was your matter “fast tracked”?

a. Yes

b. No

Polling Question 3

10


Contact your firm’s Regulatory Coordinator to discuss the proposed change

Having a conversation with FINRA staff before filing a CMA can reduce questions / issues in the initial review stages.

Be prepared

Prospective plans submitted by firms whose applications do not include demonstrated ability (e.g., systems, procedures) to conduct the planned business will encounter delays.

Remember that FINRA staff isn’t “living” the change…

Provide information sufficient for staff to understand the activity/ transaction – and how the firm has accounted for its impact.

Tips on Preparing for a CMA

11


Demonstrated Capacity to Conduct the Business Are systems in place, tested and available to demo?

Procedures adequately tailored to the business activities?

Product information (e.g., registration statement or offering memorandum, advertising materials) prepared and adequate?

Regulatory History & Customer Claims Always address Rebuttable Presumption in initial submission.

– Not just “what” happened but how and when issues were addressed through corrective action and, in light of the issues, how the firm still meets the standards.

Consider and discuss the impact, or lack thereof, for other regulatory history (e.g., exam findings, pending reviews) and customer claims (e.g., complaints, arbitrations).

Provide the supporting documentation Agreements supporting the transaction (e.g., stock, asset purchase and merger

agreements, resolutions/authorizations, etc.)

Tips on Preparing for a CMA

12


Expansions permitted without a CMA

CMA Safe Harbor Provision

13


Avoid changing the substance of the application Once an application is filed, modifying the scope of business, the methodology

for conducting the business or the personnel proposed to conduct the business will impact the review timelines and overall review process.

– Significant changes may result in a determination by staff that the change constitutes a new application.

Asset Transfers Must provide an adequate plan for the protection of customer related awards

and claims.

Review of Negative Consent letter by clearing firm prior to submission

Funding & Liquidity Issues Make sure capital and liquidity of the firm is adequate to conduct the proposed

activity.

Common Issues & How to Avoid Certain Delays

14


Regulatory Notice 13-11

– FINRA will waive the requisite fee where FINRA determines that a CMA

is proposing less significant changes that do not require substantial staff

review

– FINRA will refund the application fee (less a $500 processing fee) if an

applicant withdraws a new membership application (NMA) or CMA within

30 days after filing the application.

Submit the request as part of the initial application

FINRA will issue a decision on the request for a fee waiver

Fee Waivers

15


4. For those that filed a CMA, did you request a Fee

Waiver?

a. Yes

b. No

Polling Question 4

16


Regulatory Notice 18-23 Retrospective Review

To improve the effectiveness and efficiency of the MAP rules

Reduce overall application review period from 180

days to 150 days

Clarify events that would require a CMA

Material Change in Business Operations

“To include member engaging, for the first time, in settling or clearing of

transactions for the member’s own business or for other broker-dealers, or

carrying customer accounts.”

Proposal regarding MAP Rules

17


Pre-approval of Changes

CMA Waivers


Streamline the standards “..by deleting those that are

obsolete and redundant, and consolidating others with

the standards that are closely related.”

Proposal Regarding MAP Rules

18


Standard 1 Complete and Accurate Application (Overview of the Applicant) Consolidate Standards 1 and 14

Standard 2 Licenses and Registrations Required by State and Federal Authorities and SRO’s Consolidate Standards 2 and 12

Standard 3 Compliance with Industry Rules, Regulations, and Laws

Standard 4 Contractual or Other Arrangements and Business Relationships

Standard 5 Business Facilities Eliminate Standard 5

Standard 6 Adequacy of Communications and Operational Systems

Standard 7 Determining the Adequacy of Net Capital Consolidate Standards 7 and 8

Standard 8 Financial Controls

Standard 9 Control Mechanisms Consistent with Industry Practices Consolidate Standards 9 and 10

Standard 10 Adequate Supervisory System

Standard 11 Recordkeeping System

Standard 12 Continuing Education

Standard 13 Other Information Possessed by FINRA

Standard 14 Consistency with Federal Securities Laws

Regulatory Notice 18-23 – Streamline Standards

19


MAP to Incentivize Payment of Arbitration Awards

“To create further incentives for the timely payment of arbitration

awards by preventing an individual from switching firms, or a firm

from using asset transfer or similar transactions, to avoid payment of

arbitration awards while staying in business.”

– Materiality Consultation for Business Expansion and Asset Acquisitions

and Transfers

– Notification of Changes

MAP Proposal Regulatory Notice 18-06

20


Q&A

21


Overview of Fast Track Review Process www.finra.org/industry/fast-track

FINRA Notice to Members-Material change in Business www.finra.org/file/notice-members-00-73

Overview of Materiality Consultation Process www.finra.org/industry/overview-materiality-consultation-process

CMA Fee Waiver Process www.finra.org/industry/notices/13-11

Membership Application Proceedings-Rules Governing NMA/CMA Process www.finra.org/industry/notices/18-23

Membership Application Program-Incentivize Payment of Arbitration Awards www.finra.org/industry/notices/18-06

FINRA Resources

22

http://www.finra.org/industry/fast-track

https://www.finra.org/file/notice-members-00-73

http://www.finra.org/industry/overview-materiality-consultation-process





FINRA’s Membership Application Program (MAP) Tuesday, October 9 2:15 p.m. – 3:15 p.m.

Resources FINRA Notices

Regulatory Notice 18-23, FINRA Requests Comment on a Proposal Regarding the Rules Governing the New and Continuing Membership Application Process (July 2018)

www.finra.org/sites/default/files/notice_doc_file_ref/Regulatory-Notice-18-23.pdf

Regulatory Notice 18-06, FINRA Requests Comment on Proposed Amendments to Its Membership Application Program to Incentivize Payment of Arbitration Awards (February 2018)

www.finra.org/sites/default/files/notice_doc_file_ref/Regulatory-Notice-18-06.pdf

Regulatory Notice 13-11, FINRA Provides a Process for Waiving CMA Fees for Less Significant CMA Changes and Refunding of NMA and CMA Fees for Applications Withdrawn Within 30 Days After (March 2013)


Notice to Members 00-73, Membership Rules, SEC Approves Amendments To NASD Membership Rules (November 2000) www.finra.org/sites/default/files/NoticeDocument/p003977.pdf

Resources

Overview of Fast Track Review Process

www.finra.org/industry/fast-track

Overview of Materiality Consultation Process

www.finra.org/industry/overview-materiality-consultation-process

http://www.finra.org/sites/default/files/notice_doc_file_ref/Regulatory-Notice-18-23.pdf

http://www.finra.org/sites/default/files/notice_doc_file_ref/Regulatory-Notice-18-06.pdf



http://www.finra.org/industry/fast-track

http://www.finra.org/industry/overview-materiality-consultation-process


Identifying and Assessing High-Risk Activity Tuesday, October 9 3:30 p.m. – 4:30 p.m.

Join FINRA staff as they share helpful insight on identifying and assessing activity of registered representatives as high risk and how that intelligence can be more broadly used to assess risk across and within branch offices.

Moderator: Thomas Drogan Senior Vice President, Deputy FINRA Member Regulation, Office of Sales Practice Panelists: Patricia Hatzfeld Senior Director, Office of Sales Practice FINRA Member Regulation, Office of Sales Practice John Salerno Examination Manager, High Risk Registered Rep Program FINRA High Risk Registered Rep Program


Identifying and Assessing High-Risk Activity Panelist Bios: Moderator: Thomas Drogan is Senior Vice President, Deputy of FINRA Member Regulation, Sales Practice department and has been with FINRA for more than 19 years. Prior to the merger between NYSE Regulation and NASD, he spent four years in the Financial/Operational Department in the NYSE’s Division of Member Firm Regulation before moving to the NYSE’s Sales Practice Review Unit where he held multiple positions. In January 2008, following the merger, Mr. Drogan was promoted to Deputy Director in FINRA’s New York office where he served until December 2008 when he was appointed Deputy Director of FINRA’s Long Island office. In January 2013, Mr. Drogan was promoted to Vice President and in December 2013 was promoted to District Director for FINRA’s New York Office where he was responsible for New York’s examination and surveillance programs. In May of 2014, Mr. Drogan was appointed as Deputy in the Office of Sales Practice and in February 2016 was named Senior Vice President. In this role, Mr. Drogan provides strategic and tactical advice on how to achieve corporate and departmental goals and successfully implement regulatory programs. Specifically, Mr. Drogan assists the Executive Vice President in overseeing the national Sales Practice examination and surveillance programs to ensure work is completed in a quality and timely fashion. Mr. Drogan also ensures that the relationship with member firms results in meaningful dialogue between FINRA, Member Regulation and industry representatives and serves as a key contact with the SEC, state securities regulators, and other SROs. Mr. Drogan also has direct responsibility for FINRA’s Membership Application Program, High Risk Registered Representative Program and Senior Helpline. Mr. Drogan received his Finance degree from St. John’s University and his J.D. from Brooklyn Law School. Panelists: Patricia Hatzfeld is Senior Director in FINRA’s Member Regulation Sales Practice Department working in the New York, NY District Office leading national initiatives and projects and assisting in the oversight of the District Offices. Ms. Hatzfeld has been working at FINRA for more than 12 years. Ms. Hatzfeld began her career in the Securities Industry as a Financial and Operations Principal. She is a Certified Public Accountant and holds a Master’s Degree in Economic Crime Management. Her tenure at FINRA includes seven years as an Examiner and four years in management positions in the New York Region District Offices where she was responsible for the scheduling, planning, supervision and review of sales practice examinations of member firms. In her role as Senior Director, Ms. Hatzfeld is responsible for assisting in overseeing the national examination programs and policies as well as leading certain initiatives such as the High Risk Registered Representative Program and Examination Unit, Blotter Analytics, Special Examination Sweeps, and Annual Sales Practice Examination priorities. In the examination space, Ms. Hatzfeld serves as the Senior Director of the High Risk Registered Representative Unit. As a Regulatory Specialist in the areas of Fraud and Non-traded REITs, she has led initiatives and training sessions in the areas of Non-traded REITs and BDCs, Anti-Money Laundering, and Securities and Investment Fraud investigation techniques. Ms. Hatzfeld also worked in FINRA’s Office of Risk developing more initiatives to enhance FINRA’s risk based examination program. John Salerno is Examination Manager for FINRA’s High-Risk Representative Program. Mr. Salerno joined the program when it was founded in 2016. Mr. Salerno’s responsibilities include the identification, monitoring, and execution of examinations of High Risk Representatives for FINRA’s national program. Mr. Salerno has been with FINRA for more than 16 years. Prior to joining FINRA’s High-Risk Representative Program, Mr. Salerno worked within FINRA’s Member Supervision department conducting examinations and investigations of firms and associated persons, focusing primarily on high-risk activity. Mr. Salerno also worked for FINRA’s then subsidiary, the Nasdaq Stock Market, serving as a business analyst for its corporate offices. Prior to joining FINRA in 2002, Mr. Salerno worked for more than six years in various accounting and control positions at money center banks and large broker dealers covering derivatives, commodities, and equity sales and trading. Mr. Salerno is also a Certified Fraud Examiner.


Identifying and Assessing High-Risk

Activity


Moderator

Thomas Drogan, Senior Vice President, Deputy, FINRA Member

Regulation, Office of Sales Practice

Panelists

Patricia Hatzfeld, Senior Director, Office of Sales Practice,

FINRA Member Regulation, Office of Sales Practice

John Salerno, Examination Manager, High Risk Registered Rep

Program, FINRA High Risk Registered Rep Program

Panelists

1

welcome remarks: chip jones, finra member relations and education tuesday, october … ·...

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