%20(1).avif)
.avif)
SEC Compliance Checklist for Broker-Dealers
Broker-dealers operate under one of the most demanding regulatory frameworks in the financial industry.
The U.S. Securities and Exchange Commission and FINRA set stringent rules that govern how firms conduct business, supervise associated persons, and protect customers.
And, when you don’t abide by the requirements, you can trigger fines, license suspension, reputational damage, and enforcement actions.
That said, the checklist below provides broker-dealers with a structured overview of core compliance obligations.
It also highlights how the iPlum financial compliance line helps address the mobile-communication compliance gap that most dealer brokers overlook.
But first:
Table of Contents
1. Why would a broker-dealer need a compliance checklist?
2. Recordkeeping and communication archiving
3. Supervisory controls and written supervisory procedures
4. Registration, licensing, and personnel compliance
5. Mobile and text communication compliance with clients
6. How does iPlum address the mobile compliance issues for broker-dealers?
7. A compliant mobile and text compliance for broker-dealers starts with the right phone system
Why would a broker-dealer need a compliance checklist?
Indeed, most broker-dealers have compliance programs. However, most of these programs were built reactively, probably after an examination finding.
The best practice, however, is to have a proactive checklist, as it provides your firm with a repeatable framework for auditing its own compliance.
Here’s why dealer brokers need a SEC compliance list.
Compliance failures are expensive
FINRA and the SEC have issued billions of dollars in financial penalties against broker-dealers over the past decade.
Recent enforcement actions have targeted firms for recordkeeping violations and failures in supervisory procedures.
And then there’s the reputational damage that compounds the cost over time. Broker-dealers that maintain a compliance checklist, however, can quickly identify problems internally.
It ensures you’re audit-ready
Books and records are always at the top of every regulatory examination.
Examiners want to see that broker-dealers maintain complete, organized, and retrievable records of all business activities, securities transactions, and client interactions. Supervisory procedures come next.
That said, firms that cannot produce organized records or demonstrate active supervision receive the harshest scrutiny.
Recordkeeping and communication archiving
Recordkeeping is the foundation of broker-dealer compliance.
FINRA and SEC rules specify which records you must retain, how long you need to keep them, and in what format. In fact, recordkeeping gaps are among the most cited findings in FINRA examinations.
Electronic communication retention under SEC Rule 17a-4
The SEC rule 17a-4 requires broker-dealers to retain electronic records — including emails, texts, and business-related communications — in a non-rewriteable, non-erasable format.
As a result, firms that store records in formats that allow deletion or modification are in direct violation of federal securities laws.
A checklist item here should verify that the archiving system meets WORM storage requirements and covers all communication channels used by registered representatives.
Mobile communication — the recordkeeping area most firms get wrong
Mobile communication is where most broker-dealers carry the most unaddressed exposure.
Registered representatives use personal phones to text customers, make securities-related calls, and exchange information with other entities. Those communications are subject to the same SEC rules and FINRA rules as any other business record.
And personal phones don’t automatically archive records. In addition, you can delete, and there is no audit trail. FINRA compliance requirements apply to every channel a registered representative uses for business activities.
WORM storage and why it’s crucial
WORM — Write Once, Read Many — storage ensures that records cannot be altered or deleted after creation. It follows, therefore, that broker-dealers who store communications in standard cloud folders or email archives don’t meet SEC rules for electronic records.
Simply put, WORM storage is a baseline regulatory requirement every firm must meet to pass a regulatory examination.
Supervisory controls and written supervisory procedures
Supervision is one of the most examined areas in FINRA and SEC compliance.
FINRA rules require broker-dealers to establish procedures that govern every material aspect of their business activities. Those procedures must be documented, followed, and updated as regulatory changes occur.
What a written supervisory procedure must cover
Written supervisory procedures must address every area of the firm's business — from securities transactions and account statements to private placements and complex products.
In addition, supervisory procedures must assign responsibility to specific supervisory personnel and document how the firm monitors associated persons for compliance with FINRA rules and federal securities laws.
A checklist review should confirm that every procedure is up to date.
How to demonstrate active supervision during an examination
Written procedures mean nothing if supervisory personnel cannot demonstrate they are actively followed.
During a regulatory examination, regulators review supervision logs, approval records, and documentation of corrective actions.
Reasonable diligence in supervision is the standard that examiners apply when assessing whether a firm's compliance programs are genuinely operational.
Off-channel communication and supervisory blind spots
Off-channel communications is now a top FINRA compliance priority.
Therefore, registered representatives who use personal messaging apps for business-related communications create supervision blind spots that firms cannot monitor or archive.
FINRA and the SEC have issued significant enforcement actions and financial penalties against broker-dealers for failing to supervise off-channel communications. Written supervisory procedures must explicitly address this area.
Registration, licensing, and personnel compliance
Registration is a foundational compliance requirement.
Broker-dealers must ensure compliance by confirming that every registered representative holds current, valid registration with FINRA and meets all applicable registration requirements under federal securities laws.
Keep registered representative records current
Broker-dealers must maintain Form BD current and registration records for every associated person. Any change in business activities, disciplinary history, or outside employment must be disclosed promptly.
FINRA members are required to update registration records within 30 days of any material change.
Outside business activities and disclosure obligations
Associated persons must disclose outside business activities to their firm before engaging in them. In addition, broker-dealers must review those disclosures, assess material conflicts, and document their approval or denial.
Again, undisclosed outside business activities are a recurring finding in FINRA examinations.
Mobile and text communication compliance with clients
Text and mobile communications with customers are subject to the same FINRA rules as other business-related communications.
For starters, broker-dealers must archive every text exchange with customers, confirm that registered representatives use approved channels, and maintain those records in WORM-compliant storage.
Therefore, firms that allow registered representatives to text customers from personal phones are creating compliance failures that examiners will find.
How does iPlum address the mobile compliance issues for broker-dealers?
Mobile communication is where most broker-dealers carry the most unaddressed compliance exposure.
iPlum was built for regulated firms that need a compliant mobile setup on existing devices.
It offers features, maps to FINRA compliance and SEC rule obligations, and includes this checklist. including:
Automatic call recording and text archiving for broker-dealers
iPlum records every inbound and outbound call automatically. In addition, it archives every text message. That way, broker-dealers get a complete communication record for every registered representative with no manual activation required. In addition, firms can produce those records on demand during regulatory examinations.
WORM-compliant storage that satisfies SEC Rule 17a-4
Every call recording and text archive stored in iPlum's cloud vault meets WORM storage requirements.
Records cannot be altered or deleted after creation. As a result, broker-dealers get storage that satisfies SEC Rule 17a-4 and FINRA books-and-records compliance requirements.
A dedicated second business line on an existing mobile device
iPlum gives every registered representative a dedicated business line on their existing mobile device. That way, business-related communications can run through the iPlum line. More importantly, personal calls and texts remain entirely separate.
With iPlum, broker-dealers eliminate the blind spot in personal device supervision that can trigger enforcement actions.
Automated consent announcements on every recorded call
iPlum plays an automated consent announcement at the start of every recorded call.
It allows registered representatives to automatically meet state and federal consent requirements for every customer interaction. In addition, firms eliminate the wiretapping liability that comes with inconsistent manual disclosure practices.
A centralized compliance console for firm-wide oversight
iPlum's centralized console gives compliance officers firm-wide visibility into every registered representative's communication activity.
In addition, supervisory personnel can pull audit logs, review communication records, and confirm that every associated person is using the approved channel. The console makes active supervision demonstrable during regulatory examinations.
10-year data retention built for SEC examination readiness
iPlum's Enterprise plan retains records for up to 10 years in secure cloud storage.
With iPlum, Broker-dealers meet the long-term retention requirements of SEC rules and FINRA rules on mobile devices. Furthermore, every record remains searchable and retrievable for the full retention period.
Encrypted communication that meets data security requirements
iPlum encrypts all calls, texts, and archived records using AES-256 encryption.
The platform allows broker-dealers to meet the technical safeguard requirements of Regulation S-P on mobile devices. It also enables firms to demonstrate cybersecurity compliance at the device level.
BYOD compliance that separates personal and business communication
iPlum's dedicated business line enforces the separation of personal and business communications required by BYOD policies.
The platform ensures that associated persons cannot mix personal and business-related communications on the iPlum line.
Moreover, firms obtain organized records that reflect only business activities, making supervision, archiving, and preparation for regulatory examinations more manageable.
A compliant mobile and text compliance for broker-dealers starts with the right phone system
Non-compliance, in most cases, is not intentional.
Most compliance failures happen because firms lack the systems to meet many requirements simultaneously. Broker-dealers that address recordkeeping, supervision, registration, and customer conduct compliance build compliance programs that hold up under examination.
That said, mobile communication remains the final piece most firms have not addressed. iPlum provides broker-dealers with a compliant mobile communication setup that satisfies FINRA requirements, complies with SEC rules for books and records, and provides supervisory personnel with the oversight tools they need.
Sign up for iPlum's financial compliance line today and close the mobile compliance gap on your checklist.
