The Securities and Exchange Commission’s Office of Compliance Inspections and Examinations (OCIE) and the Financial Industry Regulatory Authority (FINRA) on Wednesday issued a Risk Alert and a Regulatory Notice on broker-dealer branch inspections, urging BDs to use the joint guidance to beef up their supervisory oversight.
This is the second in a continuing series of Risk Alerts that the SEC’s national examination staff has issued. The Alerts give a heads-up to senior management, risk management and compliance managers in the securities industry to significant risks identified by the SEC’s exam staff.
Carlo di Florio, director of OCIE, said in a statement announcing the alert that “a robust process for self-inspection of branch offices is a critical element of a firm’s compliance and supervision process, and a vital part of a comprehensive risk management program. The Risk Alert, he said, “highlights practices that are characteristic of effective branch office supervisory systems, and describes major deficiencies that SEC and FINRA examiners have found in the branch inspection process.”