Securities Regulatory Examinations for Broker-Dealers

Sylvia Scott, Attorney pic
Sylvia Scott, Attorney
Image: ffslaw.com

A Los Angeles Super Lawyer, attorney Sylvia Scott earned her juris doctor from the University of California Los Angeles, School of Law. As the head of the Securities Regulation Practice Group at Freeman, Freeman, and Smiley, LLP, attorney Sylvia Scott is experienced with regulatory examinations.

Regulatory examinations are a common occurrence within the broker-dealer community. The Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC) conduct various examinations to evaluate regulatory compliance. These include cycle/routine examinations, sweep examinations, and cause examinations.

Cycle examinations are carried out by both FINRA and the SEC. They are conducted in a cyclical basis to identify the firm’s legal and regulatory compliance. The examinations, which form the bulk of broker-dealer examinations, are done using a risk-based approach.

Sweep examinations are done on a sample of firms. They focus on a specific area of business, such as sale of private placements, then evaluate how the selected firms deal with that specific area.

Cause examinations are carried out in situations in which the regulator believes there may be violations from a firm. Cause examinations can arise from customer complaints, tips, or press articles.

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