Series 14 key terms

The senior officer a broker-dealer designates to run its compliance program, allocate compliance resources, and certify certain filings to regulators. The person needs real authority to enforce policies and report to senior management.

A firm's written standards of conduct covering employee behavior, conflicts of interest, and personal trading. It must be distributed, acknowledged, and enforced through supervision and training so the standards are actually followed.

A required written program to detect and deter money laundering, including internal policies, a designated compliance officer, ongoing training for employees, and independent testing of how well the program works.

A periodic review by someone outside the AML function, such as internal audit or an outside firm, that checks whether the anti-money-laundering program is effective and actually followed in practice.

A legal condition, such as certain criminal convictions or regulatory actions, that bars a person from working with a broker-dealer unless FINRA grants relief after reviewing the matter.

A review by FINRA, the SEC, or a state regulator of a firm's compliance, books, records, and supervisory practices. Findings can lead to a deficiency letter, a fine, or formal disciplinary action.

Written notice from a regulator listing rule violations or control weaknesses found during an examination and requiring the firm to fix them within a stated period.

A firm's written description of how it supervises employees and activities to comply with securities laws and FINRA rules. The procedures must fit the firm's actual business and be updated as that business changes.

FINRA's supervision rule, requiring firms to maintain a system with written procedures, designated supervisors, review of transactions and correspondence, and regular inspections of offices and activities.

A registered person the firm assigns to supervise particular offices, activities, or representatives. The assignment and its scope must be documented so responsibility is clear to everyone involved.

A yearly meeting where registered representatives and supervisors review compliance policies, regulatory changes, and conduct expectations. The firm keeps records showing who attended and what topics were covered.

A periodic on-site review of a branch's books, records, and activities by firm personnel to confirm compliance with procedures. Offices of supervisory jurisdiction must be inspected at least annually.

Review and sign-off by a registered principal before a communication, transaction, or account is used or opened, confirming it meets firm standards and applicable rules.

A more intensive monitoring plan imposed on a representative, office, or activity with a history of problems, with closer review of trades, correspondence, and customer contact than usual.

Ongoing required training for registered persons: a regulatory element set by FINRA covering rules and ethics, and a firm element the member firm designs to fit its own business.

Employees trading in their own accounts, which firms monitor through pre-clearance, holding periods, and periodic review to prevent conflicts and misuse of inside information.

Any paid or business-related activity a registered person conducts away from the firm, beyond passive investments. The person must give written notice to, and get approval from, the firm first.

A securities transaction outside the normal course of the firm's business, such as selling a private placement to a customer. The representative must notify the firm in writing and get approval before proceeding.

Collecting and verifying information about a customer, including identity, financial situation, and investment goals, so the firm can serve the account properly and meet its regulatory duties.

The duty to recommend only securities or strategies that fit a customer's investment profile, including objectives, risk tolerance, time horizon, financial situation, and needs, based on reasonable diligence.

SEC rule requiring broker-dealers to act in a retail customer's best interest when recommending securities or strategies, through obligations of care, disclosure, conflict management, and a written compliance policy.

FINRA rule governing advertising, sales literature, and other public communications by firms. It sets content standards, principal approval requirements, and filing obligations that vary by communication type.

Written or electronic material distributed to more than 25 retail investors within 30 days. It needs principal approval before use and may have to be filed with FINRA.

Written or electronic communication between the firm and 25 or fewer retail investors within 30 days. Firms must review and supervise it under their written procedures.

Policies that restrict how material nonpublic information moves between departments, such as investment banking and research, to prevent misuse and manage conflicts of interest.

Buying or selling securities while holding material nonpublic information, or passing such information to someone who trades, in breach of a duty. Federal securities law prohibits it.

The duty to seek the most favorable terms reasonably available for customer orders, weighing price, speed, likelihood of execution, order size, and other relevant factors.

Firm limits and rules on giving or receiving items of value with clients and business partners, designed to prevent improper influence and to require disclosure or pre-approval.

A confidential report filed with FinCEN when a firm suspects a transaction involves illegal activity or money laundering. The firm must not tell the customer that a report was made.

Procedures to verify each new customer's identity, typically using name, address, date of birth, and an identification number, before or soon after the account is opened.

FINRA rule requiring firms to make and keep books and records that accurately reflect their business, and to retain them for the periods SEC rules set.

A written grievance from a customer or other person alleging misconduct by the firm or an associated person. Firms must report certain complaints to FINRA and keep related records.

The uniform application used to register associated persons, covering employment history, qualifications, and disciplinary events. It must be amended when the information changes.

The uniform termination notice filed when a registered person leaves a firm, stating the reason for termination and any conduct concerns. It is generally due within 30 days.

SEC rule requiring a broker-dealer to keep a minimum amount of liquid capital in relation to its liabilities and the risk of its business, so customers are protected if the firm fails.

SEC rule requiring firms to safeguard customer securities and free credit balances by segregating them and keeping a special reserve bank account for the benefit of customers.

A special account a broker-dealer holds for the exclusive benefit of customers, funded by the amount of customer credits the firm owes, calculated under the customer protection rule.

The Financial and Operational Combined Uniform Single report, a periodic regulatory filing showing a firm's financial condition, net capital, and key operational data.

A written plan for how a firm will keep operating and protect customer assets during disruptions such as disasters, system failures, or the loss of key people.