Earlier this week, the NASD fined four broker-dealers affiliated with Fidelity Investments. According to the news release published on its website (www.nasd.com), NASD fined the firm a total of $3.75 million for, “improperly maintaining NASD registrations for 1,100 individuals, failing to assign registered supervisors to 1,000 individuals, failing to retain the email of 1,900 registered individuals, and other electronic recordkeeping failures. NASD also ordered the four broker-dealers to conduct comprehensive audits of the firms’ systems, policies and procedures relating to registration and electronic recordkeeping.”
Category Archives: Record Keeping
Are you Retaining Correct Order Memorandum?
February 20, 2007
Rule 204-2(a)(3) of the Advisers Act requires adviser firms to maintain a memorandum or each order given by the adviser (also known as a trade ticket). The majority of states have similar recordkeeping requirements. The specific language from Rule 204-2(a)(3) reads as follows. Items in bold have been bolded for emphasis.
Financial Statements
December 20, 2006
This entry of “Year-End Compliance Tips” focuses on the updating of financial information. If your advisor firm is registered with one or more states, you may be required to submit certain financial statements to the state regulators on an annual basis. Many states have certain net worth or net capital requirements. Some states also have surety bond requirements. Most states that have these provisions require advisor firms to substantiate they are in compliance with the rules by submitting financial statements. In some cases the financial statements must be submitted at the end of the firm’s fiscal year and in some states the financial records must be submitted at the end of the calendar year. In addition to any forms the firm may have to submit directly to regulators, it is essential the firm has updated all of its financial records under the regulatory books and records requirements. This is true for state and SEC registered advisor firms. For example, SEC registered firms are required to keep the following as part of their books and records (Investment Advisers Act of 1940, Rule 204-2):
Future SEC Initiatives: IA/BD Study, Books and Records, New Part II, Soft-Dollar and Hedge Funds
October 25, 2006
In a recent speech, Andrew J. Donohue, Director of the SEC’s Division of Investment Management, outlined several future initiatives for the Division of Investment Management. These initiatives include the SEC’s Investment Adviser/Broker-Dealer study which aims to analyze current industry and regulatory practices and also examine the levels of protection afforded to investors under both the Securities Exchange Act and the Investment Advisers Act. The next initiative Mr. Donohue discussed is a potential reformulation of the SEC’s books and records requirements for investment advisors. This should be welcome news as hopefully the SEC will factor the many technological changes that have occurred over the last 40 years and establish practical books and records requirements.
