Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Regulation and Compliance > State Regulation

A Compliance Culture

Your article was successfully shared with the contacts you provided.

ReceNt NASD actions have led to increased compliance efforts on the part of many firms. The Financial Services Institute has released “Independent Broker-Dealers: Building a Culture of Compliance,” the second in a series of white papers dealing with the supervisory and compliance capabilities of independent broker/dealers (IBD). The paper points to a 2004 SEC Staff Legal Bulletin that raised concerns about IBD firms’ supervision of financial advisors in remote locations, among other things, recommending supervisory “best practices.”

The Bulletin and other enforcement actions have had a major impact on the compliance efforts of IBD firms, motivating them to review their own supervisory systems to identify and fill any remaining gaps. IBD firms also reviewed the best practices recommendations and adapted them to their own circumstances. As indicated by research conducted by FSI and Cerulli, IBDs spend an average of 10% of their gross revenue on compliance. Account surveillance using sophisticated technology (22.2%) and office audits (22%) represent more than 40% of the total compliance expenses. Development of compliance policies was 11.4%. The paper states that these statistics demonstrate that IBD firms are dedicating the resources necessary to improve the effectiveness of their compliance efforts.



© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.