Common Examination Findings and Effective Compliance Practices (Medium and Large Firm Focus) Wednesday, May 17 10:00 a.m. 11:00 a.m.

Transcription

1 Common Examination Findings and Effective Compliance Practices (Medium and Large Firm Focus) Wednesday, May 17 10:00 a.m. 11:00 a.m. Join FINRA staff as they discuss FINRA s cycle examination process and common deficiencies noted during examinations of medium and large firms. Industry practitioners discuss effective practices for preparing for examinations, taking corrective action, and updating compliance procedures and practices based on examination results. Moderator: Ed Wegener Senior Vice President and Regional Director FINRA Midwest Region Panelists: Marion Halliday Senior Vice President and Chief Compliance Officer Janney Montgomery Scott, LLC John Hickey Deputy District Director FINRA New York District Office Kenneth Wagner Chief Compliance Officer William Blair & Company, LLC 2017 Financial Industry Regulatory Authority, Inc. All rights reserved. 1

2 Common Examination Findings and Effective Compliance Practices (Medium and Large Firm Focus) Panelist Bios: Moderator: Ed Wegener is Senior Vice President and Midwest Regional Director for FINRA. In that role, he is responsible for leading the department of Member Regulation s regulatory efforts for the region including its surveillance and examination programs. Mr. Wegener started with FINRA (fka NASD) in Since that time, he has lead or been involved in several significant fraud, sales practice and financial and operational examinations and investigations. He has served in a leadership role in a number of key strategic initiatives for the organization including the design and implementation of FINRA s risk-based examination program. FINRA is responsible for regulating brokerage firms and licensed brokers doing business in the United States. The Midwest Region covers firms and individuals conducting securities business in the states of Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota and Wisconsin. FINRA s Midwest Region is made up of approximately 130 surveillance and examination staff. Mr. Wegener is a graduate of Illinois State University and he has a Certified Regulatory and Compliance Professional designation from the FINRA Institute at the Wharton School of the University of Pennsylvania. He is also a Certified Anti-Money Laundering Specialist. Mr. Wegener has completed the FINRA Leadership Program at the Wharton School and the Leadership Development Program at the Center for Creative Leadership. Panelists: Marion Halliday, Senior Vice President of Janney, Montgomery, Scott LLC, is originally from Louisville, Kentucky. She received her BA with honors in History from Dartmouth College and then graduated from University of Virginia School of Law, where she was a Dillard Fellow and served on the editorial board of the JOURNAL OF LAW AND POLITICS. After law school, she clerked for a federal appellate judge, the Honorable Boyce F. Martin, Jr. of the Sixth Circuit. Ms. Halliday then practiced corporate law at Kentucky law firm, Frost, Brown, Todd (formerly Brown, Todd & Heyburn). She was subsequently appointed head of the Kentucky Division of Securities where she led a group of industry representatives, lawyers, and scholars in the re-writing of the Kentucky Securities Act. At the conclusion of her government appointment, she became Associate Director of Compliance at Hilliard Lyons. Then, in 2009, Ms. Halliday joined Janney, Montgomery, Scott LLC as Chief Compliance Officer for the Private Client Group; in 2014, she became Chief Compliance Officer for the Firm. In addition to her compliance responsibilities at Janney, she, along with other senior women leaders, co-founded WIN, Janney s Women s Interactive Network. Ms. Halliday is a respected industry leader and public speaker, serving on various SIFMA and FINRA advisory committees and programs. In addition to her legal license, she holds various industry licenses including the Series 7, 14, 24, and 66. For several years, Ms. Halliday served on the FINRA Series 24 Content Committee, which assists FINRA in developing test questions for various supervisory licenses including the Series 24, 23, 72 and 11. In January of 2016, she has appointed to the FINRA CE Council. She is also an active member of SIFMA s Compliance Regulatory Policy Committee as well as the Regional Firms GC and CCO working group. When she is not working, Ms. Halliday is a board member of the Philadelphia-based non-profit Legacy Youth Tennis foundation. John Hickey is Deputy District Director for the FINRA New York District Office. He supports the Director in leading and managing the Cycle and Branch regulatory programs for approximately 1000 member firms. Additionally, he works with the Regional Director, District Director, Associate District Directors and Surveillance Directors to develop and implement strategic and tactical measures necessary to ensure timely, high-quality completion of District s regulatory programs. Prior to this role, Mr. Hickey served as an Associate Director at FINRA and managed a unit of approximately 23 individuals responsible for conducting cycle, cause and branch examinations of several member firms. Mr. Hickey has more than 19 years of regulatory experience while employed at FINRA and prior to that at NASD and has worked as an examiner, supervisor and manager during his career. Before joining NASD, he spent three years in the Operations Department at a clearing firm, where he worked in the Margin Department. Mr. Hickey has a bachelor s degree in Management from University of Rhode Island. Mr. Hickey also holds the Certified Regulatory and Compliance Professional TM, CRCP TM designation Financial Industry Regulatory Authority, Inc. All rights reserved. 2

3 Kenneth L. Wagner is a Partner and Chief Compliance Officer for William Blair & Company, LLC in Chicago Illinois. Previously Mr. Wagner had been CCO for Retail Distribution for the Lincoln Financial Group. Before that he was associated for more than 20 years with J.J.B. Hilliard, W.L. Lyons, Inc., during which time he acted in both legal and compliance capacities, including Chief Compliance Officer and General Counsel. Mr. Wagner is a past member of the NASD District 5 Conduct Committee, and was moderator for the District 5 Focus Group of Compliance Officers from its formation in 1994 until Mr. Wagner is also a past member of the SIA Compliance and Legal Division Executive Committee. Before its merger with FINRA, Mr. Wagner served on several NYSE compliance-related committees. Mr. Wagner also served on the board of the National Society of Compliance Professionals ( NSCP ) from and on the CE Council from He currently serves on the Series 4/9/10 Exam Review Committee, and the Business Conduct Committee of the CBOE. Mr. Wagner obtained a BA from Northern Kentucky University, an MA from the University of Cincinnati and JD from University of Kentucky. Mr. Wagner is a frequent speaker at industry seminars and conferences Financial Industry Regulatory Authority, Inc. All rights reserved. 3

4 FINRA Annual Conference May 16-18, 2017 Washington, DC Common Examination Findings and Effective Compliance Practices (Medium and Large Firm Focus)

5 Panelists Moderator Ed Wegener, Senior Vice President and Regional Director, FINRA Midwest Region Panelists Marion Halliday, Senior Vice President and Chief Compliance Officer, Janney Montgomery Scott, LLC John Hickey, Deputy District Director, FINRA New York District Office Kenneth Wagner, Chief Compliance Officer, William Blair & Company, LLC FINRA Annual Conference 2017 FINRA. All rights reserved. 1

6 To Access Polling Under the Schedule icon on the home screen, Select the day, Choose the Common Examination Findings and Effective Compliance Practices (Medium and Large Firm Focus) session, Click on the polling icon: FINRA Annual Conference 2017 FINRA. All rights reserved. 2

7 Polling Question 1 1. What statement best describes your firm: a. Traditional retail brokerage b. Independent channel c. Non-retail (e.g., capital markets) FINRA Annual Conference 2017 FINRA. All rights reserved. 3

8 Polling Question 2 2. In terms of the size of your office, does your firm have: a. 10 or fewer branch locations (both osj and non-osj satellites )? b. More than 10 but fewer than 100 branches (both osj and nonosj satellites )? c. More than 100 branch locations (both osj and non-osj satellites )? FINRA Annual Conference 2017 FINRA. All rights reserved. 4

9 Polling Question 3 3. Does Your Firm have a dedicated person or staff to manage regulatory examinations? a. Yes b. No FINRA Annual Conference 2017 FINRA. All rights reserved. 5

10 Polling Question 4 4. How actively involved are business (non-compliance / legal) staff in the exam response process? a. Not at all b. Somewhat c. Quite a lot FINRA Annual Conference 2017 FINRA. All rights reserved. 6

11 Common Examination Findings and Compliance Best Practices (Medium and Large Firm Focus) Wednesday, May 17 th 10:00 a.m. 11:00 a.m. Resources FINRA Rules FINRA Rule Outside Business Activities of Registered Persons FINRA Rule Private Securities of an Associated Person FINRA Rule Anti-Money Laundering Compliance Program FINRA Regulatory Notices FINRA Regulatory Notice 17-18: Guidance on Social Media and Digital Communications-Guidance on Social Networking Websites and Business Communications (April 2017) FINRA Regulatory Notice 15-17: Communications with the Public-Guidance on Rules Governing Communications with the Public (May 2015) FINRA Regulatory Notice 11-54: Branch Office Inspections-FINRA and the SEC Issue Joint Guidance on Effective Policies and Procedures for Broker-Dealer Branch Inspections (November 2011) FINRA Regulatory Notice 11-39: Social Media Websites and the use of Personal Devices for Business Communications-Guidance on Social Networking Websites and Business Communications (August 2011) Financial Industry Regulatory Authority, Inc. All rights reserved. 1

12 FINRA Regulatory Notice 10-06: Social Media Websites-Guidance on Blogs and Social Networking Web Sites (January 2010) FINRA Regulatory Notice 09-05: Unregistered Resales of Restricted Securities-FINRA Reminds Firms of Their Obligations to Determine Whether Securities are Eligible for Public Sale (January 2009) Notice to Members NASD Notice to Members 05-48: Outsourcing Member s Responsibilities When Outsourcing Activities to Third-Party Services Providers (July 2005) NASD Notice to Members 01-79: Selling Away And Outside Business Activities-NASD Reminds Members of Their Responsibilities Regarding Private Securities Transactions and Outside Business Activities (December 2001) NASD Notice to Members 97-19: NASD Regulation and New York Stock Exchange Memorandum Discusses Sweep Report and Provides Guidance on Heightened Supervision Recommendations (April 1997) NASD Notice to Members 96-33: NASD Clarifies Rules Governing RR/IAs (May 1996) Financial Industry Regulatory Authority, Inc. All rights reserved. 2