FINRA and SEC Compliance Checklist

Failure to comply with FINRA and the SEC can cost organizations millions of dollars. That’s millions of dollars that could have gone to expanding operations, developing new products, and offering better compensation packages. SEC and FINRA compliance issues can also lead to embarrassing PR scandals that affect worker satisfaction, customer retention, and public confidence. Using checklists and other compliance tools makes it easier for organizations to complete internal checks at all levels. Here’s how to create your checklist.

Identify FINRA Compliance Requirements

The first step in creating a FINRA compliance checklist is identifying which regulations apply to your organization. So, what is FINRA compliance, and how does it affect your business? Depending on the size of your organization and its business activities, you may be subject to different requirements than others in your industry. You can find a comprehensive list of all current FINRA rules on its website.

Some common compliance issues that organizations face include:

• Anti-money laundering
• Cybersecurity
• Marketing and advertising
• Trading practices
• Communications and sales
• Recordkeeping
• Financial management

Identify SEC Compliance Requirements

After identifying what FINRA regulations you need to observe, it’s time to examine each SEC compliance rule. Doing this will help you answer the questions of what is SEC compliance and what that means for your business operations. The SEC website provides a helpful search tool in the right-hand corner that lets you find specific rules and regulations. You can also browse particular topic areas, such as the following:

• Accounting and auditing
• Broker-dealers
• Compliance
• Corporate finance
• Derivatives
• Economic analysis
• Enforcement
• Investment advisers
• IPOs
• Mutual funds

Gather Information for Your SEC and FINRA Checklist

You can create separate checklists, but you might find that some of the rules overlap. For example, both FINRA and the SEC have regulations related to recordkeeping. Use the following sources as a starting point.

FINRA Checklists

FINRA compliance tools include checklists that organizations should use as a base. Here are some of the most common ones:

• Cybersecurity Checklist
• Books and Records Requirements Checklist for Broker-Dealers
• General Books and Records Requirements Checklist
• Reg BI and Form CRS Firm Checklist
• CAT Small Firm Onboarding Checklist
• Checklists for Mandatory Materiality Consultations Under Rules 1017(a)(6) and 1017(a)(7)
• Checklist for Organizational Change
• Firm Checklist for Compromised Accounts

SEC Checklists

SEC compliance solutions mainly cover applications and forms. While filing the correct forms plays a critical role in compliance, these forms do not ensure organizational compliance. Review the following SEC resources with a legal and compliance expert and determine what applies to your business:

• Rules and Regulations for the Securities and Exchange Commission and Major Securities Laws
• SEC Forms List
• SEC Disclosure Guidance

Follow These FINRA and SEC Compliance Checklist Best Practices

Your checklist’s content is critical in how well it maintains compliance. However, how you create it and the administration process also determine effectiveness. Consider these best practices.

Divide the Checklist By Roles

You have likely already decided what general headers to include in your comprehensive checklist. That is a valuable document for managers to use. However, compliance issues that affect the entire organization tend to begin with individual actions taken by employees.

Consequently, managers should create a separate FINRA or SEC compliance checklist for each position that plays a role in compliance. For example, your accountants follow different compliance requirements from your HRM professionals, but both play a role.

Regularly Review and Update Your Checklists

Organizations change, and so do the compliance rules. Review your checklists at least quarterly to update any changes and ensure all the content is still relevant. Doing this also allows you to take advantage of new compliance technologies as they become available.

Ensure this gets done by appointing someone to tackle this task. You might use an internal professional or outsource it to legal and compliance experts. If you choose to outsource compliance, be mindful of the data you need to share in the process.

Leverage Technology

Paper documents can get lost or easily fall into the wrong hands, especially if workers do not dispose of them properly. Leverage technology to digitize and even automate some aspects of compliance and monitoring. Doing so can save your workers time and reduce frustration. For example, workers might prefer to fill out checklists via individual prompts throughout the week or when tackling specific tasks instead of reading long lists.

Some compliance software programs can also integrate with your organization’s existing systems. This provides an efficient way to manage and monitor compliance since you can receive alerts when someone tries to access sensitive information or violates a rule.

How Message Capturing and Archiving Solutions Tick One Big Item Off the Compliance Checklist

Failure to supervise employees and communication channels are two top reasons companies face compliance violations and fines. Instant message capturing and archiving solutions automate communications records and store them in secure locations. Authorized persons can then retrieve these records for investigation or compliance purposes. Book a LeapXpert demo to see how it works.

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