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Section 1
Maintain written supervisory procedures and controls
Preview
Preview: 2. Supervision of General Broker-Dealer Activities (45 of 150 scored items)
Preview includes- 4 of 8 lesson topics
- 1 overview segment
- 3 core concepts
- 2 exam tips
Lesson Topics
- FINRA Rule 3110 supervisory systems and written supervisory procedures
- Office/OSJ/branch inspection cycles and documented reviews
- FINRA Rule 3120 supervisory-control testing
- FINRA Rule 3130 CEO annual certification and CCO process
Overview
This objective is the core of the Series 24 principal role: build a supervisory system that is reasonably designed for the firm's actual business, assign responsibility, document the procedures, test whether they work, correct weaknesses, and retain evidence of the process.
Core Concepts
- Rule 3110 requires a reasonably designed supervisory system and written procedures for the businesses the firm conducts and the activities of its associated persons. Final responsibility for proper supervision rests with the member firm.
- Supervisory responsibilities must be assigned to appropriately qualified principals. WSPs should identify who supervises what, how reviews are performed, when escalation occurs, and what records prove the review.
- The firm must review its businesses at least annually. OSJs and branches that supervise non-branch locations are inspected at least annually; other branch offices are inspected at least every three years, subject to a more frequent risk-based cycle; non-branch locations follow a regular periodic schedule.
Exam Tips
- When an answer choice says 'the firm has a policy' but the facts show no implementation, surveillance, review, documentation, or testing, it is usually incomplete.
- Series 24 questions favor a documented, risk-based supervisory response: identify the risk, assign responsibility, review evidence, escalate, remediate, and test the fix.
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Section 2
Supervise account opening and maintenance
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Section 3
Supervise order entry, routing, and execution
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Section 4
Supervise investment-banking activities
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Section 5
Supervise conflicts and associated-person conduct
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Section 6
Register or terminate the broker-dealer and offices
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Section 7
Review and approve public communications
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Section 8
Confirm booking, confirmation, and settlement
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Section 9
Approve offering and investor-disclosure communications
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Section 10
Supervise compensation, referrals, and gifts
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Section 11
Review transactions, recommendations, and disclosures
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Section 12
Approve and monitor products and services
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Section 13
Review trade reporting
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Section 14
Supervise research
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Section 15
Address misconduct, complaints, and regulatory events
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Section 16
Create and retain required books and records
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Section 17
Supervise financial responsibility and cash management
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Section 18
Hire, register, and maintain associated-person records
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