All written complaints received from a customer or from an individual acting on behalf of the customer must be reported promptly to the principal of the firm. The firm is required to:
- Maintain a copy of the complaint at a supervising office of supervisory jurisdiction
- Electronically report all complaints to FINRA within 15 days of the end of each calendar quarter. If no complaints were received, no report is due
- Report complaints within 10 days to FINRA, if the complaint alleges misappropriation of funds or securities or forgery
The firm must maintain a separate customer complaint folder, even if it has not received any written customer complaints. If the firm’s file contains complaints, the file must state what action was taken by the firm, if any, and it must disclose the location of the file containing any correspondence relating to the complaint. Information relating to the customer complaint must be maintained by the firm for 4 years.
A principal is required to review all written customer complaints but there is no required time frame to respond or take action.
All broker dealers that carry customer accounts must send its customer’s information detailing FINRA’s public disclosure program at least once per calendar year. The information must contain the program’s 800 number, FINRA’s website and a statement that an investor brochure includes the same information and is available.
As a member’s business grows, they will often wish to open new offices. The classification of the additional offices depends on the type of activity that is conducted. There are three types of offices that a member may open. They are:
- An office of supervisory jurisdiction
- A branch office
- A satellite office
Office of Supervisory Jurisdiction
A member firm must inform FINRA which offices it has identified as being an office of supervisory jurisdiction, or an OSJ. An OSJ is any office that conducts one or more of the following activities at that location:
- Has custody of customer funds or securities
- Has final approval for advertising or sales literature
- Has final approval of customer accounts
- Reviews and approves customer orders
- Executes orders or makes markets in securities
- Forms or structures offerings
- Supervises employees at other branch offices
At least one resident principal must mange the OSJ. The resident principal must enforce the policies and procedures of the firm, review all customer activity, and inspect the branch offices within their jurisdiction.
Note: A copy of the firm’s policy and procedures manual as well as a copy of FINRA manual must be kept in each OSJ. The FINRA manual must be made available to a customer upon request.
A branch office is any location that is identified to the public as being a place where the member conducts business but does not engage in any of the activities that would require it to be considered an OSJ. Branch offices are inspected by an OSJ. A branch office may operate without a resident principal. A registered representative may act as the branch manager. The supervisory responsibility is with the OSJ.
A satellite office is usually a smaller office that does not meet the definition of a branch. A satellite office may not have any signs or advertising. The home office of a registered representative that works out of their house would be considered a satellite office.
D. Annual Compliance Review
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