Supervisory Controls
To ensure that a supervisory system is functioning as required and that written procedures are being scrupulously obeyed, FINRA requires that each member firm set in place a system of written supervisory controls to police and enforce compliance of its own supervisory system.
Accordingly, each member firm must identify one or more principals to establish, maintain, and enforce the controls. Each year, this designated principal must submit a report to the member firm’s senior management detailing the supervisory control system in place, the results of the compliance testing, any significant violations or exceptions that may have taken place during the year, and any amended procedures that may have been created in response.
For member firms that reported $200 million or more in gross revenue during the previous calendar year, each report must include a discussion of the preceding year’s compliance efforts in each of the