FINRA Rules and SQWatcher

RULE 2210

RULES 3110, 3120 & 3130

RULES 4511 & 4540

Securities Exchange Act of 1934

SQWATCHER supports your firm’s adherence to regulatory requirements by actively supervising websites for unapproved changes and providing historical archives of these sites.

It creates historical records of these websites, and 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.

FINRA Rule 2210. Communications with the Public

FINRA Rule 2210 requires certain communications, social media sites, websites, presentations, online articles, etc., to receive pre-approval from the broker-dealer.

SQWatcher allows you to monitor websites that are not hosted with your approved providers. Rules can be configured to trigger reviews when pages change, new content is added, images are added and even when specific terms are found. SQWatcher organizes website changes into a manageable, easy to use workflow.

Source: https://www.finra.org/rules-guidance/rulebooks/finra-rules/2210

FINRA Rule 3110. Supervision

FINRA Rule 3110 requires a system of supervision of registered persons. Documentation and evidence of supervision is also required. FINRA can request a firm to provide this information at any time, for any time period.

SQWatcher will assist in your supervision of registered persons’ websites. Our custom built-in web crawlers scan your website(s) daily, looking for changes, archiving them, and analyzing them for compliance reviews.

Source: https://www.finra.org/rules-guidance/rulebooks/finra-rules/3110

FINRA Rule 3120. Supervisory Control System

FINRA Rule 3120 requires a supervisory system of controls for firms. Testing and verification that the supervisory procedures are reasonably designed. If a firm is going to investigate a registered rep, there needs to be a protocol for conducting the investigation. For an investigation, a firm usually looks at email, trading practices, bank accounts, tax returns, and in the past, a basic Google search.

SQWatcher will allow your firm to demonstrate that there is a supervisory system in place for monitoring your registered advisors' websites. With automated monitoring, you will be notified of website changes while continually documenting each step. SQWatcher will also archive all of the changes for your supervisory control system. With easy search and reporting features, you will have everything you need to address issues before they are brought to your attention by a regulator.

Source: https://www.finra.org/rules-guidance/rulebooks/finra-rules/3120

FINRA Rule 3130 Annual Certification of Compliance and Supervisory Processes

This rule requires the firm's chief executive officer(s) (CEO(s)) to certify annually that the firm has processes in place to establish, maintain, review, test, and modify policies and procedures reasonably designed to achieve compliance with applicable securities laws and regulations and FINRA rules.

With SQWatcher running in the background, your supervision of your registered advisors’ websites are continually being maintained. Undisclosed website changes will be automatically brought to the supervisors’ attention with complete documentation.

Source: https://www.finra.org/rules-guidance/rulebooks/finra-rules/3130

FINRA Rule 4540. Reporting Requirements for Clearing Firms

Each member that is a clearing firm or self-clearing firm is required to report to FINRA which includes information and data pertaining to the member and any member broker-dealer for which it clears. If a clearing house uses a third party service provider such as SiteQuest Compliance, they have to agree to provide this information as well.
4540 also applies in a round-about-way since it addresses member requirements to provide information as requested by FINRA and that if third-party service providers are used, they have to agree to provide the information, as well.

With our Eagle Eye’s and SQWatcher’s automated documentation applications you will have everything you need to respond to a regulator.

Source: https://www.finra.org/rules-guidance/rulebooks/finra-rules/4540

FINRA Rule 4511. General Requirement

Broker dealers must keep and maintain records for at least six years as required under the FINRA rules, the Exchange Act, and the applicable Exchange Act rules. Additionally, the first two years of records must also be in an easily accessible place.

SQWatcher keeps a complete inventory of each website with daily archives. You’ll know exactly what a website contained at any time in the past. The inventory feature has search capabilities that allow users to find exactly what they’re looking for.

SQWatcher organizes page changes into a manageable workflow that is easy to search, review, and retrieve when needed.

Source: https://www.finra.org/rules-guidance/rulebooks/finra-rules/4511

Securities Exchange Act of 1934 (Also reference FINRA Rule 4511)

The Securities Exchange Act was created to help prevent and prohibit deceit, misrepresentations, and other fraud in the sale of securities. FINRA rules heavily reference this act, specifically Rule 17a-4. This is where records need to be kept for at least 6 years and the first two years of records must also be in an easily accessible place.

SQWatcher keeps a complete inventory of each website with daily archives and 17a-4/WORM compliant storage is available as an option for our clients.

Source: https://www.govinfo.gov/content/pkg/COMPS-1885/pdf/COMPS-1885.pdf
Source: https://www.finra.org/sites/default/files/SEA.Rule_.17a-4.Interpretations_0_0.pdf

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FINRA Rule 3270. Outside Business Activities of Registered Persons

FINRA Rule 3270 requires broker dealers to review in advance the Outside Business Activity of registered advisors. Registered advisors “should” be getting pre-approval and “should” be giving full disclosure. When what “should” be disclosed is not. How do you protect your firm?

Eagle Eye will identify online activity associated with registered advisors. This app will also discover other DBA’s associated with your registered advisors. (Undisclosed DBAs are a growing concern for FINRA according to their annual Report on Examination Findings)

5% of Eagle Eye findings are undisclosed OBAs and DBAs.

One supervisor client shared with us, “Since implementing Eagle Eye our registered reps now come to us immediately if they have an OBA or DBA that we need to approve. They are no longer waiting for a once a year report.”

Source: https://www.finra.org/rules-guidance/rulebooks/finra-rules/3270