FINRA Podcast: Reviewing Correspondence, Communications and Complaints - Part 2
FINRA released the second in a five-part series of podcasts about FINRA's new Consolidated Supervision Rules. This podcast further addresses the main Supervision Rule, FINRA Rule 3110, and explains the requirements for supervisory procedures for reviewing correspondence, communications and complaints.
In the podcast, FINRA explains that firms must have supervisory procedures to review incoming and outgoing written correspondence, as well as internal communications relating to their investment banking or securities business, including all electronic communications. According to FINRA, this requirement ensures that firms properly identify and handle customer complaints, instructions, funds and securities, as well as communications that require review under FINRA rules and federal securities laws.
In addition, Rule 3110 requires that the correspondence and internal communications review be risk-based. FINRA explains that, in using risk-based principals, firms may decide not to review all correspondence before it is distributed. However, the firm's procedures must provide for three things:
- the education and training of associated people about the firm's correspondence procedures;
- the documentation of that education and training; and
- surveillance and follow-up to make sure that the procedures are implemented and followed.
FINRA went on to clarify that, although firms are not required to review every internal communication, they must still provide evidence of their reviews.
See: FINRA Podcast; Transcription of Podcast.See also: Lofchie's Guide to Broker-Dealer Regulation: Supervision Chapter.Related News: "FINRA Podcast: Primary Supervision Requirement - Part 1" (September 18, 2014).