Supervision and Compliance of Brokerage Firms

Abstract

Brokerage firms are governed by a comprehensive set of rules and guidance regarding the firms supervision of its brokers. This article traces the supervision rules from their statutory origin through their further development by FINRA, the Financial Industry Regulatory Authority. The article examines the various FINRA rules which govern supervision exclusively, as well as those which touch on supervisory obligations. Next, the article discusses the guidance offered by FINRA through regulatory notices and examination priorities, which is related to supervisory obligations. The article focuses on the guidance related to various forms of conflicts, problem brokers, and issues related to senior investors.