As an investor, it is crucial to ensure that your brokerage firm is diligently overseeing your account. Effective supervision of registered representatives is essential to safeguarding your investments and ensuring compliance with applicable securities laws. At Bakhtiari & Harrison, we understand the critical role that proper supervision plays in the securities industry, and we are here to help if your brokerage firm fails to meet its supervisory responsibilities.
Understanding FINRA’s Supervision Requirements
The Financial Industry Regulatory Authority (FINRA) mandates that brokerage firms establish and maintain comprehensive supervisory systems. According to FINRA Rule 3110, firms must have written supervisory procedures designed to achieve compliance with applicable securities laws and regulations. These procedures should encompass all aspects of the securities business, including branch office operations, to ensure compliance and protect investors.
For more information on FINRA’s supervision rules, visit FINRA’s Supervision webpage.
Key FINRA Rules and Regulatory Notices
FINRA Rule 3110
FINRA Rule 3110 outlines the requirements for broker-dealers to establish and maintain a system to supervise the activities of their registered representatives. This rule emphasizes the need for supervisory personnel to have a robust understanding of the business activities of the individuals they oversee. Firms must have written supervisory procedures in place that are reasonably designed to achieve compliance with applicable securities laws and regulations.
Read more about FINRA Rule 3110.
FINRA Regulatory Notice 18-15
FINRA Regulatory Notice 18-15 highlights the importance of ensuring compliance with applicable securities laws through effective supervision. This notice provides guidance on how firms can enhance their supervisory systems to detect and prevent misconduct by their registered representatives.
Explore the details of FINRA Regulatory Notice 18-15.
FINRA Rule 3120
FINRA Rule 3120 requires firms to have supervisory control systems in place that are reasonably designed to achieve compliance with applicable securities laws. This rule mandates that firms conduct regular reviews of their supervisory procedures to ensure they are effective in preventing and detecting violations.
Learn more about FINRA Rule 3120.
The Role of Supervisory Personnel
Supervisory personnel play a critical role in ensuring that a brokerage firm’s supervisory systems are functioning effectively. They are responsible for overseeing the activities of registered representatives and ensuring compliance with applicable securities laws. Failure to supervise claims often arise when supervisory personnel neglect their duties, leading to significant investor losses.
What Happens When a Brokerage Firm Fails to Supervise?
When a brokerage firm fails to supervise its registered representatives adequately, investors can suffer substantial financial losses. These failures can include not having proper written supervisory procedures, inadequate monitoring of business activities, and insufficient oversight of branch offices. Investors have the right to file failure to supervise claims to seek compensation for their losses.
How Bakhtiari & Harrison Can Help
At Bakhtiari & Harrison, we specialize in representing investors who have been harmed due to a brokerage firm’s failure to supervise. Our experienced attorneys are well-versed in FINRA rules and regulations and have a proven track record of achieving favorable outcomes for our clients. We are dedicated to ensuring that broker-dealers are held accountable for their supervisory responsibilities and that investors receive the compensation they deserve.
If you believe that your brokerage firm has failed to supervise your account properly, call us at (310) 499-4732. Let us help you protect your investments and hold your brokerage firm accountable.
Disclaimer: This blog is for informational purposes only and does not constitute legal advice. For specific legal concerns, please consult with an attorney.