Supervising Associated Persons and Personnel Management
Registration and qualification
Supervising options activity requires the right credential. A Registered Options Principal holds Series 4; a General Securities Sales Supervisor holds Series 9 and 10. A Series 24 alone does not authorize options supervision. Registered representatives must be properly registered, fingerprinted, and listed on Form U4; material changes to U4 disclosure must be amended promptly, and Form U5 filed at termination.
Ongoing personnel obligations
- Continuing education: the Regulatory Element on schedule and a firm-designed Firm Element annually.
- Annual compliance meeting and periodic attestations.
- Rule 3270 outside business activities: written notice before an associated person accepts compensation for any outside business - not just securities-related work.
- Rule 3280 private securities transactions: written notice, and approval or recordation as a selling-away arrangement.
- Rule 3220 gifts: the $100-per-person annual limit; entertainment must be reasonable and not a disguised inducement.
- Branch offices: registration, designation of offices of supervisory jurisdiction, and the inspection cycle.
Traps
Assuming a producing manager may supervise their own options sales without independent review. Assuming an unregistered assistant may approve account openings or correspondence. Forgetting that undisclosed outside activity is a violation even when it never touches securities.
Worked example
A producing branch manager holding Series 7, 9, 10 and 24 buys a 5% stake in a friend's insurance agency. Because it is a business activity for compensation, written notice under Rule 3270 is required before participation; the firm may approve, restrict or deny. Silence is the violation.