SEC Issues Risk Alert to Broker-Dealers Regarding Examination Criteria

Posted on June 10th, 2024 at 1:27 PM
SEC Issues Risk Alert to Broker-Dealers Regarding Examination Criteria

From the desk of Jim Eccleston at Eccleston Law

The Securities and Exchange Commission (SEC) has issued a new Risk Alert, advising broker-dealers that their prior disciplinary history, financial stress indicators, and media reports could make them likely candidates for an examination.

ThinkAdvisor reports that the alert aims to help broker-dealers prepare for possible exams by outlining the criteria the SEC’s Examination Division may use to select firms for review and the focus areas for these exams. The alert also lists the types of information and documents that exam staff may initially request during a broker-dealer examination, including a Sample Initial Information Request List.

According to ThinkAdvisor, the SEC exam staff may consider several factors. Those include prior exam history, tips, complaints, referrals involving the firm, the length of time since the last exam, and the firm's customer base, products, and services. Specific offices or branches of a broker-dealer may also be targeted based on identified risk factors, such as customer complaints or outside business activities of personnel. 

 

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.

Tags: eccleston, eccleston law, sec

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