This summer the Securities and Exchange Commission instituted five separate settled fines against two SEC-registered investment advisers, three investment adviser representatives, and a marketing consultant who committed and/or caused violations of the Testimonial Rule under the Investment Advisers Act of 1940 through their use of social media and the internet. (read the entire article)
Several testimonial ads about registered representatives were created and published on social media outlets. Additionally, two videos were created and published online containing client testimonials on its public website and on YouTube.com. The SEC’s regulators found that these firms (and their ads) were in violation of Section 206(4) of the Advisers Act and Rule 206(4)-1(a)(1).
As a compliance supervisor are you aware of what ads your registered advisors are putting online? Are they creating and publishing videos without sending them first to compliance for approval? With all of your responsibilities how do you find the time to continually monitor your advisor’s online presence? Without action, this could leave your firm vulnerable to fines from the SEC or FINRA because of online content you are unaware of.
SiteQuest Compliance's Eagle Eye application contains industry-leading technology that will help you monitor and discover your advisors’ online presence. Eagle Eye is designed with built-in intelligence that searches and sifts through the web’s billions of pages of clutter bringing only the most relevant results to your attention. Our multi-query processes and dynamically designed algorithms provide more accurate search results for you to quickly review. Our application is loaded with features that automate your monitoring and documentation processes. Our clients have found that Eagle Eye cuts their workload by as much as 80%.
Each of these aforementioned firms were fined between $35,000 and $10,000 from the SEC. That fine just the tip of the iceberg. There are lawyer fees, employee time spent and resources dealing with the issue, proving to the regulatory agency that the fine has been fixed and that you are now in compliance. There is also the unknown cost to your firm’s reputation.
Eagle Eye is a first of its kind application that is designed specifically to help the financial industry easily and effectively supervise the web.
Contact us today to discuss your supervision concerns. We will be able to match our products to your needs.
Did you read FINRA’s news release on October 1, 2018, entitled “FINRA Announces Plan to Consolidate Examination and Risk Monitoring Programs”? (Read the full-text news release)
FINRA President and CEO Robert W. Cook said, “By directing our expertise and resources in a more tailored way, we will become more effective at examining for compliance.”
Bari Havlik, who is overseeing this new program said, “Implementing a unified program structure will help make us a more agile and risk-focused regulator.”
So what does this mean for you as a supervisor?
This is a potentially massive shift in focus when it comes to FINRA exams and while it’s early, it appears that exams will now be more comprehensive with a wider area of focus than has been done in the past. Instead of focusing on only trading compliance or financial compliance, exams will likely be broader in nature. This new program is likely to zero-in on the supervision processes your firm has in place beyond the focused scope you’ve been used to.
This consolidation will force firms to dig a deeper into their WSPs and supervision processes including an examination of how they supervise the web.
We have over 15 years of experience in providing leading-edge compliance and web supervision software applications and website monitoring and archiving solutions for the financial industry.
Contact us today. Tell us your concerns when it comes to your “Risk Monitoring Programs” and we will share with you the solutions SiteQuest Compliance has developed for the financial industry.
Recently I was told by a longtime client that our customer service is “old fashioned, but in a good way”. Perhaps that is the last thing a technology company wants to hear.
As president of SiteQuest Compliance, I reflected over what our client meant in that statement. We do pride ourselves on the fact that when you call our office with questions or in need of technical support, that your call is quickly answered by a live person. We don’t force our clients to use service tags, make them navigate unhelpful phone trees, or waste time waiting in queues listening to mundane hold music. We are there for our customers, with a readiness and willingness to meet and exceed their expectations.
A compliance supervisor that has been using our applications for several years recently said that “SiteQuest Compliance provides top notch service. They are always happy to hear from me and have exceptional response time. No tickets, bills or painful processes, just a happy voice ready to help.”
Another compliance supervisor utilizing our Eagle Eye program said; ‘I deal with vendor support in my day-to-day job. SiteQuest Compliance stands out because they provide prompt service and always take it to the next level to ensure I'm satisfied.”
Another one of our clients said that, “I have been using SiteQuest Compliance's Eagle Eye program for almost two years now and have had excellent results. The system does exactly what it was designed to do and we have received excellent customer service from the company. Highly recommended.”
We make it easy to contact us with our phone numbers posted right on our website under the “Contact Us” menu header. We enjoy and look forward to our phone conversations with our clients who we know by name and personally as well.
We may be called “old fashioned” when it comes to our customer service, but we accept that name with pride in knowing that it sets us apart from others.
Feel free to reach out to me with any questions or web supervision needs that might arise.
President & CEO
Recently the Division of Securities, Utah Department of Commerce fined two credit unions and a licensed broker-dealer for failing to supervise the advisors working within the credit unions. (read the full report)
These credit unions are not registered broker-dealers or investment advisors. They entered into a networking agreement with a third-party broker-dealer to provide securities brokerage services to their credit union customers through registered representatives. In this case, the parties involved were not closely monitoring the actions and communications of these advisors with regards to how the advisors and the credit unions branded these services. The “lines were being blurred” and it was not clearly disclosed that these advisors worked for the third-party investment service provider, and not for the credit unions.
The emails, marketing materials, communications in print and electronic were not being supervised and in the view of the regulator, causing confusion with customers being misled. As a result, the broker-dealers and the credit unions were fined $750,000.
FINRA and the SEC are not the only regulatory agencies requiring firms to monitor their advisors. Each state has their own division of securities regulators.
Have you entered into a third-party agreement with another company to provide security brokerage services to their clients? Do you have advisors that are working in the facilities of these partners?
The biggest question of all is, “Are you sufficiently monitoring your advisors and their online presence?”
The use of our Eagle Eye application would have identified where the broker dealers’ presence was online such as social media, blogs, online articles, Yelp, YouTube and more, allowing you to review each URL. Our SQWatcher application would have alerted you to any changes on their websites ensuring that your supervision department could review and approve wording changes before they go live on the web.
We’d love to tell you more. Contact SiteQuest Compliance today to see how our applications can aid in your supervision responsibilities, saving you time and lowering your risk.
In January of this year FINRA release it “2018 Regulatory and Examination Priorities Letter”. High-risk firms and rogue brokers were one of the top concerns cited by President and CEO, Robert Cook.
Then on April 30, 2018, FINRA released it Regulatory Notice 18-15 regarding Heightened Supervision. FINRA noted that there are times where heightened supervision of an advisor may be appropriate. This notice stated that “FINRA requires member firms to establish and maintain supervisory systems for each of their associated persons and to test and verify annually that they have established reasonable procedures, including procedures for heightened supervision of associated persons, where necessary.”
In May at FINRA’s Annual Conference there was a discussion regarding the criteria FINRA uses to identify high-risk activity. This discussion noted that FINRA is looking for:
Several times this year FINRA has stressed the importance of “heightened supervision for high-risk brokers”. This should be one of the top priorities for your firm.
Do you have WSPs addressing these issues?
Are they causing you additional time, work, documentation, strain, and monitoring for your supervision department?
Our Eagle Eye application has an innovative “Heighten Supervision Mode”. The flexibility of this application empowers you to monitor your advisors at a variety of levels. For those that push the envelope a heightened level of supervision may be required. Eagle Eye will dig deep and with “Eagle Eye” precision discover and notify you of your advisors’ online presence. (Watch how this works.)
Eagle Eye allows you to customize your supervisory approach without worry, and without additional charges or fees. Contact us today for your personalized demo and we will show you how our “Heightened Supervision Mode” will benefit your firm.
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. Recently there has been an increase in fines imposed by FINRA regarding website monitoring. Just like this fine imposed just a few months ago. 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.
In September 2017, a West Coast financial firm was fined $35,000 by FINRA. It was found that the firm failed to maintain documentation or review the websites maintained by the firm’s registered representatives. (read full report) Are you responsible for monitoring your registered representatives’ websites and online presence? It can become a daunting and time-consuming task. SiteQuest Technologies brings you years of experience when it comes to web monitoring, archiving, and website analysis.
SQWatcher is our second product in this category and we have added cutting-edge technology that makes it even easier for you to keep track of what’s going on with your website(s). SQWatcher is configured with specialized “watchers” that look for the types of website changes you want to review. This technology offers a lot of flexibility allowing SQWatcher to adapt to your needs. Our archiving feature backs-up your website(s) daily so that you have a running history to help you quickly and easily respond to a regulator when audited.
In addition, this West Coast firm was also fined for “failure to establish a policy or system for approval, for their registered representatives’ business social media accounts, and did not review, approve, supervise, or retain any of the social media accounts maintained by registered representatives for securities-related business purposes.”
“failure to establish a policy or system for approval, for their registered representatives’ business social media accounts, and did not review, approve, supervise, or retain any of the social media accounts maintained by registered representatives for securities-related business purposes.”
Our Eagle Eye program will help you quickly identify any social media accounts that your registered representatives own. Allowing your firm to take action and comply with FINRA requirements. The system's automated documentation and screenshots of your findings will help you respond to a regulator.
Don’t let the time constraints of monitoring and documenting your advisor sites and web presence open you up to fines and the associated internal and external costs of a FINRA investigation like the one received by this firm. The cost of our Eagle Eye and SQWatcher programs are significantly smaller. Save time and money while protecting your firm from preventable fines. Our Eagle Eye and SQWatcher programs have two separate purposes, but working together they become a force multiplier in aiding our clients with their responsibilities.
Contact us today for your personalized demo. We will help match our programs to your needs.
Source: FINRA Case #2013034981501
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 Technologies 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.
A company from Virginia was recently expelled from FINRA membership earlier this year 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.
We are continually reviewing the monthly disciplinary actions that are reported by FINRA. Almost monthly, we are finding rulings and fines that could have been prevented through the use of our Eagle Eye program.
Eagle Eye has been around for several years helping financial firms with their general supervision of the web. One of our clients said, “That one of our previous hurdles was demonstrating to our regulators with documentation that we were conducting the appropriate monitoring. With Eagle Eye's audits reports, that are available directly from the system, we are able to document and show individual findings in an organized manner."
In July of this year a brokerage firm received a $5,000 fine from FINRA (Full case details). It was discovered that the firm’s CEO/CCO never conducted its quarterly review of the registered representative’s outside business activity or evaluated any potential conflicts that may have arisen since the initial disclosure of its outside business activity, both of which were required by the firm’s written supervisory procedures. The firm did not have any knowledge of the outside business activates of their representatives.
As a supervisor, how are you reviewing your representative’s outside business activities? FINRA has provided this helpful form to help you gather this information directly from your employees, but what if your employees neglect to tell you about these OBAs? How do you find out about these activities on your own? That is where Eagle Eye can be part of the solution.
See for yourself how this program can work for you. Contact us today for a demo!
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 Utah Football and have attended nearly every home game since 2002. Go Utes!