I’M SURE I HAVE SOME COMPLIANCE GAPS, BUT DON’T KNOW WHERE TO START...
It can be very challenging for financial firms to search, monitor, and document their advisor's web presence and registered websites without interrupting day-to-day business demands and operations. Yet failure to do so can leave exposed compliance gaps unaddressed and open your firm up to fines and disciplinary actions from regulatory agencies. Common compliance gaps often include improperly documented or improperly enforced policies and procedures, insufficient evidence of a WSP, undisclosed OBAs and social media accounts, as well as rogue advisor websites. Many firms know that they have gaps, but they don’t know where to start.
FINRA publishes a monthly disciplinary report with actions and fines against firms and individuals. One of the most common fines involves undisclosed OBAs. Currently, many firms work on the “honor system” with hopes that their employees with be completely honest and disclose everything required. Unfortunately, this honor system doesn’t always work. How are you to find out if your advisors have an undisclosed OBA? That is where Eagle Eye can help you close this gap with our deep web searching technology that quickly cut through the clutter of the web and bring to your attention relevant results when monitoring your registered reps.
Do you know if your advisors have disclosed all of their social media accounts? In a recent random sampling of 10 employees from a prospective client, our Eagle Eye solution found serious violations with three of the advisors including several OBAs and social media accounts that were never disclosed. This is a typical compliance gap for many firms. Is this one your firm is facing as well?
Are you sure that your firm is monitoring all of your advisors online advertising? Do you have a process in place that is easy to demonstrate to a regulator? Do you even know if they are producing advertising that you are unaware of? This could be another compliance gap your firm is facing.
In addition to all of the supervision regulations, you need to prove that your firm has WSPs in place to help document all of the actions your firm is taking to monitor web presence. For many firms, this turns into another compliance gap they need to address.
You have a broker-dealer responsibility to monitor every website that your advisors' utilize for business purposes. Many times, advisors want to have their own website to help them stand out among the thousands of other financial advisor websites out there. How are you monitoring these websites? Are you notified of every change automatically so that it can be approved? If not, here is another compliance gap you might be facing, there has been an increase in fines imposed by FINRA regarding website monitoring. SiteQuest Compliance's SQWatcher program is an easy to use solution that will quickly help you fill this gap at a fraction of the cost of a fine.
Then to complete all of this monitoring you need to document all of your findings in an organized manner. Many times this is the last step in the compliance process and yet it can become one of the largest compliance gaps for a firm. Our automated documentation features found as part of our programs are detailed and searchable. We provide you with all of the information you need to respond to a regulator.
SiteQuest Compliance offers programs, support, and experience to help you bridge these gaps and respond to a regulator. A firm that is able to demonstrate compliance with tangible evidence will mitigate risks, such as costly regulatory fines, and be better prepared for unannounced visits from regulatory agencies.
Contact us today and talk to us about any gaps you need help addressing.
Are You Updating Your WSPs?
A firm in Florida was recently fined for failing to update their WSPs after it began recommending EB-5 investments. Additionally, it was discovered that many of their WSPs were “not deemed reasonable because they provided only limited guidance to those representatives at the firm who facilitated and participated in these EB-5 transactions.”
Are you continually updating your WSPs?
How do you ensure new policies and WSPs have been reviewed and approved before distributing them throughout your firm?
Oftentimes firms have their policies and WSPs in various pdfs and word documents throughout their system. Many advisors are referencing outdated files saved on the network or their computers.
The Policies app from SiteQuest Compliance helps firms organize their policies and written supervisory procedures into one online platform that conveys a professional branded content to their advisors.
Policies is a powerful tool used to consolidate, version control, and distribute your firm’s policies and WSPs to your employees and advisors. With our VIP Service included with Policies, SiteQuest Compliance manages all the changes, formatting, and online publishing for no additional charge.
Policies notify your employees when a Policy or WSP has been updated. Our “favorites” feature allows advisors to bookmark these new updates for quick reference. In accordance with FINRA rules our Policies application ensures the most up-to-date policies are accessed, identified, and utilized, reducing your risks.
This same disciplinary action ruled that “the firm failed to establish, maintain and enforce a system, including WSPs, reasonably designed to supervise its registered representatives’ EB-5 related websites. The firm did not conduct regular supervisory reviews of websites maintained by the two representatives in relation to their EB-5 business that contained content that violated FINRA’s advertising rules.”
Our SQWatcher program compliments our Policies application while assisting your compliance department with monitoring your registered advisors’ websites.
SQWatcher automatically creates workflow events when website changes have been made, allowing for quick and easy reviews. SQWatcher’s updated dashboard, bulk review enhancements, and powerful workflow review processes allows your firm to monitor and document dozens to hundreds of websites with relatively few employee hours involved.
Automated documentation reduces compliance and “failure to supervise” risks while demonstrating to regulators, your firm is actively supervising these unique websites in compliance with FINRA and SEC rules.
Contact us today for your personalized demo and see for yourself how SiteQuest Compliance can streamline your processes while maximizing your time and efficiencies.
MONITORING WEBSITES CAN BE DIFFICULT, TIME CONSUMING, AND SOMETIMES THEY BECOME A BIG HEADACHE
Websites are always changing, trending, and updating information about products, company and or your advisors. What happens when these sites aren’t hosted by one of your approved advisor website providers? Those “rogue sites” or “off the range sites” as they are often called, that are created directly by the advisor or by a provider outside of the industry. It then becomes your responsibility to monitor, identify, respond, and document everything that happens with that website as well as archiving it.
While there are various solutions out there that help monitor websites for changes, reviewing changes and finding the right kinds of changes have proven to be difficult. With SQWatcher, we took a completely different approach and put added focus on the types of content that comes into the workflow.
SQWatcher stands for SiteQuest Watcher and our “Watcher” technology is behind everything that happens in the system. For every client, we create custom “watchers” that identify and isolate the types of changes they would like to review. As the application scans your website(s) throughout the day, it will analyze the changes that are found and determine if a review is required.
Additionally, we've learned over the years that advisor websites have many dynamic elements contained within them. These include stock tickers, date widgets, recent post sidebars, calendars, and more, all of which can change on a daily or near daily basis, often generating unwanted reviews. We’ve added a new technology that allows our clients to request “ignores” on these dynamic elements to limit unnecessary reviews. These adjustments allow the sites to be "tuned" over a very short period of time which limits the number and volume of reviews in a big way.
Finally, we’ve added powerful bulk review actions that in essence, allows a single review to apply to multiple pages. For example, if the system detected a change to the footer, that would generate hundreds of reviews in other systems, each requiring a separate review. With SQWatcher’s bulk review processes, this sort of change can be reviewed once and then applied across the remaining pages that reflect the same change, streamlining the review process like never before.
SiteQuest Compliance is proud of our long-standing tradition of listening to our customers’ needs within their job requirements. Our SQWatcher application was built with these customer requests in mind. We would love to take the time to personally show you how this application will work for your firm. Contact us today for your personalized demo.
Compliance with FINRA Rule 2210
The “Communications with the Public” Rule FINRA 2210 states that “an appropriately qualified registered principal of the member must pre-approve each retail communication before the earlier of its use or filing with FINRA's Advertising Regulation Department ("Department").”
“Retail Communications” include all electronic formats as well.
In addition to supervision approval:
“Each member shall establish written procedures that are appropriate to its business, size, structure, and customers for the review by an appropriately qualified registered principal of institutional communications used by the member and its associated persons. Such procedures must be reasonably designed to ensure that institutional communications comply with applicable standards.”
Our Eagle Eye and SQWatcher applications support your compliance program when it comes to complying with this rule.
Our innovative Eagle Eye application will search the internet and allow supervisors to identify and discover your registered advisors’ online presence. Our multi-query processes and dynamically designed algorithms provide more accurate search results for supervisors to quickly review.
With our automated documentation and reporting features, you will have everything you need including when a result was found, who reviewed it, comments that were made and timestamps on every action taken during the online supervision of your registered advisors.
SQWatcher will supervise and archive all websites, even those not hosted with your approved providers. It will organize web-page changes into a manageable, easy to use workflow. Automatic triggers based upon your requirements will notify you of pending reviews.
These products were developed for the compliance supervisors who are looking for automated solutions to replace manual processes that prove to be ineffective and tedious.
Note: NASD Rule 2210 has been superseded by FINRA Rule 2210.
What controls does your firm have in place to aid you in discovering DBAs if your advisors are not disclosing them?
“FINRA’s examination, surveillance and risk monitoring programs play a central role in supporting FINRA’s mission of investor protection and market integrity.”
“DBAs and Communications With the Public” were one of the findings highlighted. FINRA continues to find that many registered representatives are not compliant with FINRA Rule 3270 in trying to conceal their outside business activities.
“FINRA observed that certain firms did not maintain sufficient WSPs and controls, or provide adequate disclosures regarding the use of DBA names.”
What controls does your firm have in place to aid you in discovering these DBAs if your advisors are not disclosing them? How do you know what your advisors are putting online using their “DBA” name? That is where our Eagle Eye application steps in. Our multi-query processes and dynamically designed algorithms provide more accurate online search results for you to quickly review. Our new “Risk-Based Review Process” provides added system intelligence, enhanced lexicon capabilities, system learning, and detailed evaluation of your search results. Eagle Eye automatically discovers your riskiest advisors and focuses your attention to where it’s needed.
FINRA’s exam report also focused on registered representatives’ use of DBA names on their websites, social media accounts, seminars, and more that failed disclose they were working on behalf of a firm.
FINRA also found many instances where there was no hyperlink to FINRA’s BrokerCheck. “Some registered representatives’ websites did not contain a “readily apparent reference” and hyperlink to FINRA’s BrokerCheck on the web pages that included the representatives’ professional profiles, as FINRA Rule 2210(d)(8)(A) (Communications with the Public) requires.”
With precision our Eagle Eye application can find undisclosed websites, and social media accounts using the DBA names owned by your registered advisors. Enabling you to supervise and make sure that your advisors are following FINRA requirements. Then, our SQWatcher application can help you monitor, review, approve, and document changes made to your registered representatives’ websites. (Learn more about this application) These two applications become force-multipliers in your supervision program.
The annual FINRA Exam Findings Report is helpful for firms in bringing non-compliance issues to the forefront. It is a good time to reflect and examine on your own WSPs and supervisions procedures. With over 15 years of working in the financial industry, SiteQuest Technologies is an industry leader in providing innovative compliance and supervision software applications and website solutions for the financial industry.
Contact us today with your DBA supervision concerns.
Read the entire FINRA Exam Findings:
Related Article: Are You Finding Everything You Need to Monitor?
As the SEC “Modernizes” their Marketing Rule for Investment Advisors, What does it mean for Compliance?
It has been over 40 years since significant changes to "The Investment Advisers Act" were adopted. To say that advisors are excited about this recent update is definitely an understatement. With all of the different communication and social media platforms available to advisors, they are eagerly looking forward to sharing testimonials with potential clients hoping to open new doors of opportunities.
Firms and their compliance departments need to take a proactive approach when it comes to addressing these new marketing updates. Testimonials and endorsements still need to be monitored and approved to ensure they are not misleading investors. Firms need to decide what types of statements they are going to approve, what platforms will be utilized, and how registered advisors are going to notify them and gain approval before any endorsement is published.
Initially advisors will want to add these testimonials and endorsements to their websites and other online destinations that may or may not be monitored by compliance. Demands on compliance’s time for monitoring and approvals will certainly increase. Additionally, firms need to reevaluate their disclosure policies to ensure that advisors provide notification and documentation of what and where they wish to publish testimonials and endorsements online.
Compliance departments should expect to see a large increase in their workload related to internet monitoring and approvals that need to occur. What will compliance do to monitor endorsement and testimonial platforms such as Yelp, Google Reviews, or social media platforms like Linkedin, Facebook, and Twitter? Advertisements that include third-party ratings will be required to include specific disclosures to prevent them from being misleading.
Is compliance waiting for advisors to disclose everything? Are policies based entirely on the honor system? How do you discover your advisor’s online presence, including these new testimonials and endorsements if they are not disclosing them to compliance?
While you are forming your compliance strategy and updating policies, procedures and workflows it is important to consider how and what technologies can assist compliance with this increased workload. As the SEC and FINRA are adapting to new technology, compliance departments need to evolve and rely on innovative technology as well to support their job requirements.
For over a decade, SiteQuest Compliance has continued to be a trusted partner, supporting compliance and supervision departments with tools that can help meet these increasing demands with regards to compliance and supervision.
Our Eagle Eye solution uncovers and supervises your advisors’ online footprint. It discovers social media accounts, websites, blogs, yelp pages, OBAs, DBAs, and online profiles, allowing you to address issues prior to regulatory discovery or examination.
Our SQWatcher platform monitors and archives advisor websites including those that may be hosted by non-approved website providers. It creates historical records of these sites, creates workflow events of specific types of changes like new pages, changes to readable text, images, and more with customizable rules to meet your needs.
This update to the Investment Advisers Act will require your firm to revise its policies. Our newly launched Policies solution is a powerful tool used to organize, version control, and distribute your firm’s policies and Written Supervisory Procedures (WSPs) to your employees and advisors. Ensuring that your advisors always have access to your most current policies with easy to search features.
As your advisors are “Modernizing their Marketing Practices” contact us today to discuss your specific needs and concerns. Let us show you how we can help streamline your workflows to maximize your time, while helping to ensure you don’t miss anything with regards to internet and website supervision and content approval.
Sources: https://www.sec.gov/news/press-release/2020-334 | https://www.sec.gov/rules/final/2020/ia-5653.pdf
What is SQWatcher
WHAT IS SQWATCHER?
SQWatcher monitors and archives advisor websites that may be hosted by non-approved website providers. It creates historical records of these sites, creates workflow events of specific types of changes like new pages, changes to readable text, images, and more with customizable rules to meet your needs.
WHY DO YOU NEED IT?
SQWatcher supports your firm’s adherence to regulatory requirements like FINRA Rules 2210, 3110, 3120, 4511 and 4550 by actively supervising these websites for unapproved changes and providing historical archives of the site.
YOUR RETURN ON INVESTMENT
SQWatcher’s powerful workflow review processes along with dynamic crawler technology allows your firm to monitor and document dozens to hundreds of websites with relatively few employee hours involved. It reduces compliance and “failure to supervise” risks while demonstrating to regulators, your firm is actively supervising these unique websites in compliance with FINRA and SEC rules.
Schedule your personalized demo today!
This spring FINRA announced the formation of the Office of Financial Innovation that will serve as a central point of coordination for issues related to financial innovations by FINRA member firms, particularly new uses of financial technology.
The goal in mind to further enhance FINRA’s ability to identify, understand and foster financial innovation in a manner that strengthens investor protection and market integrity.
With 10 years of experience supporting our partners in their supervision and compliance with FINRA, SiteQuest Compliance is pleased about the dedication to financial innovation.
SiteQuest Compliance has a long standing tradition of being a thought-leader. Working side-by-side with customers as we develop and improve our supervision applications to meet their needs. As more and more regulation burden is being put upon financial firms, SiteQuest Compliance is stepping up and serving as a trusted partner. Learn more about our applications.
Eagle Eye is the first of its kind application that uncovers and supervises your advisors’ online footprint. It discovers social media accounts, websites, blogs, OBAs, DBAs, online profiles, and events that belong to or are about your advisors, allowing you to address issues prior to regulatory discovery or examination.
SQWatcher stands for our SiteQuest "Watcher". Our SQWatcher application monitors and archives advisor websites that may be hosted by non-approved website providers. It creates historical records of these sites, creates workflow events of specific types of changes like new pages, changes to readable text, images, and more with customizable rules to meet your needs.
Policies organizes, manages and delivers your firms policies and WSPs. Our Policies application provides a clean, easy-to-use, easy-to-search and up-to-date experience for your advisors. Policies brings all of your procedures, policies, WSPs and other documentation into one place that can be accessed on both a desktop and mobile devices.
Our customers have referred to our applications as “force multipliers” that exponentially expand their search and supervision capabilities. Firms are able to identify and address issues before they are brought to their attention by a regulator.
“Innovation continues to pose new opportunities and challenges for our member firms and the broader financial services industry, and it is essential that we as regulators keep pace,” said FINRA President and CEO Robert W. Cook.
With the even increasing trend for registered advisors to utilize technology to grow their online presence with updated profiles while sharing fresh and timely content. It is paramount that supervisors have support and a partner to help them with their ever increasing responsibilities.
Let us show you how we can help. Contact us today to discuss your supervision challenges. Together we can lay out a plan to keep pace with technology innovations.
2020 Supervision Trends
2020 is a big year for us as we are celebrating 10 years of compliance partnerships. There have been many significant changes in supervision over the past 10 years, especially with an increase in workload and scope for online supervision. Trying to stay compliant with the FINRA 3110 Supervision rule can become a daunting task as the web offers an easy to use and often free resources for advisors to get their name and practice out in the public eye.
As YOUR compliance partner, we’ve observed several interesting trends that we expect to see increase during 2020.
With the increase in online articles being published on blogs, websites, and social media sites like Linkedin, many advisors are writing, being mentioned, and even cited in third party articles. We continue to see these occurrences with very little if any disclosure information and perhaps is not considered pre-approved content.
Have you heard of Quora? Quora is an online question and answer platform. 775,000 people use Quora monthly to ask questions. This is a large audience that advisors have the ability to connect with. They can publish content, answer people’s questions, and search for specific topics that relate to your industry. BUT how do you know if your registered advisors are using Quora?
Yelp is another online platform that is continually growing in popularity. The Securities and Exchange Commission recently charged three advisers and a marketing firm for violating the testimonial rule by promoting their business on Yelp. Over 4.6 million businesses are using Yelp. With 163 million Yelp reviews, how are you to know if your advisors are actively soliciting testimonials from their clients?
Adding to your monitoring struggle is YouTube. It is estimated that over 300 hours of video are uploaded to YouTube every minute! There is an increasing trend in people publishing personal video and vlogs related to their business. With over 1 billion daily users how are you to find videos uploaded to YouTube by your registered advisors if they don’t send you the direct links?
Advisors can create non-monitored social media accounts. How do you know if your advisors even have a social media account if they don’t tell you about it? How do you find these social media accounts?
One of the biggest trends that we see continuing into 2020 are the use of DBAs. FINRA observed that “certain firms were not maintaining sufficient WSPs and controls, or providing adequate disclosures regarding the use of DBA names.” Outside business activities and unauthorized content from your registered advisors are a growing concern that will always be present. What controls does your firm have in place to aid you in discovering these DBAs if your advisors are not disclosing them? How do you know what your advisors are putting online using their “DBA” name?
Your time is valuable. Any search engine can produce an endless amount of meaningless results that need to be reviewed. Our Eagle Eye application is designed with built-in intelligence that sifts through the web’s clutter and brings the most relevant results to your attention. Our multi-query processes and dynamically designed algorithms provide more accurate results for a quick review process. In addition to our search results our automated screenshots feature helps you document, report and escalate any issue that is brought to your attention.
One of our clients said :
"The Eagle Eye Surveillance system has been a force multiplier in my firm’s supervisory scheme. This simple tool has transformed my internet surveillance sweep process from a time-consuming, multi-day enterprise where I view the same search results over and over to a simple process that can be completed in a couple of hours."
Another one of our clients said:
“As soon as we implemented Eagle Eye, the system found searches that were previously missed with the manual process and as a result, we updated our policy and procedures to minimize compliance risk. Also, one of our previous hurdles was demonstrating to our regulators with documentation that we were conducting the appropriate monitoring but with the audits reports, that are available directly from the system, we are able to document and show individual findings in an organized manner."
You can minimize your risk and address these growing trends by utilizing our Eagle Eye application.
Contact us today for your personalized demo of how our application with work for YOUR firm.
A company from Virginia was expelled from FINRA membership for several violations. Some of the FINRA findings included;
“That the firm included issuer communications on its website that it knew or had reason to know contained untrue statements of material facts or were otherwise false or misleading.”
If a claim is filed against your company for posting statements on your website that the claimant said is misleading or untrue, are you able to defend your company? Do you have the documentation and reports to support your response?
Our SQWatcher application is a web-based tool that not only archives your website, but also analyzes it each day. SQWatcher creates readily accessible backup files that can be easily retrieved to immediately identify and fix something that could have gone wrong.
It’s also important to note that unlike other archival systems that may only take a screenshot to show you what the website “looked like” in the past, SQWatcher collects the actual HTML code for every page on your clients’ website(s). This provides the ability to not only view the page in question, but also browse the rest of the site as it appeared in the past as part of your review process.
Are you responsible for monitoring one or more websites for your company? This can become a daunting task for any financial supervisor with the continual changes and updates. Are you notified when website information is updated so that you can review and ensure that the changes made online are correct? SQWatcher has taken this into account so that you are automatically notified.
This same Virginia firm was also cited by FINRA for “not reasonably supervising its activities of those of its associated persons.”
Our Eagle Eye product is the first of its kind application that is designed specifically to help the financial industry easily and effectively supervise the web. Eagle Eye automatically searches, documents, and reports on your web supervision responsibilities so you have everything you need to find and address issues before they are brought to your attention by a regulator.
Eagle Eye and SQWatcher working together are a force multiplier in your supervisory scheme. The cost of these applications are just a fraction of the cost a fine.
Working in the finance industry for over 15 years SiteQuest Technologies is an innovative partnership for your firm. We work closely with your supervision departments making sure that our products are continually evolving and optimized with your concerns in mind.
Contact us today to see how we can assist you in your web supervision needs.
About James Cella
James Cella is the President of a growing and innovative compliance technology provider called SiteQuest Compliance. James is a customer-centric individual and focuses on building and sustaining positive and lasting relationship with his clients and partners. James and his family are "super fans" of University of Utah Football and have attended nearly every home game since 2002. Go Utes!