Broker Dealer Examination Risk Alert

The Division of Examinations (Exams) published a Risk Alert (attached) to help broker-dealers prepare for an examination. The Risk Alert outlines its process noting over 10 factors for selecting broker-dealer firms to examine and highlights the areas of focus for the examination. It also provides the types of information, including document types, the staff may initially request during an examination of a broker-dealer. The Risk Alert includes a Sample Initial Information Request in an accompanying Appendix.

The Risk Alert points out that the scope of an examination, and consequently the documents requested, will vary from examination to examination depending on the examined firm’s business model, associated risks, and Exam’s reason for conducting the examination. 

Within the Sample Iitial Information Request, the General Information and Supervisory and Compliance requests are standard fare. 

Compliance4 finds it helpful that the SEC identified additional select topics such as Sales Practices, Regulation Best Interest, Form CRS, AML and Net Capital and Customer Protection which firms can prepare for

in advance. Compliance4 reminds firms that they should remain in a state of readiness for an SEC exam and this Risk Alert is informative so that broker-dealers may prepare themselves for an examination.

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the examination. It also provides the types of information, including document types, the

staff may initially request during an examination of a broker-dealer. The Risk Alert

includes a Sample Initial Information Request in an accompanying Appendix.

The Risk Alert points out that the scope of an examination, and consequently the

documents requested, will vary from examination to examination depending on the

examined firm’s business model, associated risks, and Exam’s reason for conducting

the examination. 

Within the Sample Initial Information Request, the General Information and Supervisory

and Compliance requests are standard fare.  Compliance4 finds it helpful that the SEC

identified additional select topics such as Sales Practices, Regulation Best Interest,

Form CRS, AML and Net Capital and Customer Protection which firms can prepare for

in advance.

We remind firms that they should remain in a state of readiness for an SEC exam and

this Risk Alert is informative so that broker-dealers may prepare themselves for an

examination.