Broker-Dealer Regulatory Responses
Responding to FINRA, SEC and State Regulatory Inquiries
A regulatory inquiry or examination demands careful attention from the moment it is received. Responses to FINRA, the SEC, state securities regulators, and other regulators should be accurate, responsive, properly documented, and consistent with the firm’s books and records, supervisory procedures, disclosures, and actual business practices.
The LeGaye Law Group assists broker-dealers in evaluating and responding to regulatory examinations, information requests, deficiency letters, and other regulatory inquiries. Our experience with broker-dealers on registration, compliance, supervisory, and operational matters enables us to evaluate a regulatory request in the context of the firm’s overall business and compliance program.
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Regulatory Examinations
FINRA and SEC examinations can involve a broad review of a broker-dealer’s business, supervisory systems, books and records, financial condition, communications, customer relationships, and compliance controls. We assist firms throughout the examination process, including evaluating regulatory requests, coordinating document production, preparing written responses, collaborating with management and compliance personnel, and addressing follow-up questions.
Requests for Information and Documents
Regulatory requests can require a firm to gather significant amounts of information from across its organization. We help clients identify information responsive to a request, coordinate collection and review, evaluate potential regulatory issues raised by the requested material, and prepare organized responses.
The process is not simply about producing documents. Management should understand what is being provided, whether the records are internally consistent, and whether the information may identify a compliance or supervisory issue requiring additional attention.
Deficiency Letters and Examination Findings
An examination may result in observations, exceptions, or deficiencies that require a written response and corrective action. We assist firms in reviewing regulatory findings, determining the underlying facts, evaluating applicable policies and procedures, and developing appropriate responses. When remediation is appropriate, we can assist the firm with revisions to Written Supervisory Procedures, compliance controls, training, documentation, testing, or other measures responsive to the identified issue.
FINRA Rule 8210 and Other Regulatory Inquiries
Certain FINRA inquiries may involve formal requests for information, documents, or testimony. These matters can differ from routine examinations and may require a more focused legal and regulatory response. We assist broker-dealers and associated persons in evaluating the scope of the request, gathering, and reviewing responsive information, preparing written responses, and addressing related regulatory issues.
When an inquiry raises potential enforcement, disciplinary, or litigation concerns outside the scope of a routine compliance engagement, evaluate the matter accordingly and, where appropriate, coordinate with specialized litigation or enforcement counsel.
Regulatory Response and Remediation
A regulatory response should address not only the immediate request but also any underlying compliance issue identified by the inquiry. Because The LeGaye Law Group also assists broker-dealers with supervisory procedures, compliance testing, AML programs, registration, FINOP matters, and ongoing compliance, we can help firms move from response to remediation where appropriate.
This may include reviewing or revising policies and procedures, conducting targeted testing, documenting corrective action, providing training, or helping management implement enhanced supervisory controls.
Preparation Before an Examination
The best time to identify a compliance weakness is generally before a regulator does. Our Compliance Program Testing and Ongoing Regulatory Compliance Services can help firms assess their supervisory and compliance systems, books and records, documentation, and regulatory readiness before an examination.
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Responding to a Regulatory Matter
Whether your firm has received an examination request, a deficiency letter, a FINRA information request, or another regulatory inquiry, early evaluation can help management understand the request, organize its response, and identify issues that may require additional attention.