Introduction

The Regulatory Framework

Regulatory Structure of the Securities Industry

Federal Securities Laws

State Securities Laws

Other Regulations

The Role of the Self Regulatory Organizations (SROs)

Exercises: Understanding How the Regulatory Structure Works

The NASD’s Conduct Rules

Rule 2110: Standards of Commercial Honor and Principles of Trade

Rule 2310: Recommendations to Customers

Rule 2315: Recommendations To Customers in OTC Equity Securities

Rule 3120: Use of Information Obtained in a Fiduciary Capacity

Rule 3060: Influencing or Rewarding Employees of Others

Rule 2230: Confirmations

Rule 2240: Disclosure of Control Relationship with Issuer

Rule 2120: Use of Manipulative, Deceptive, or other Fraudulent Devices

Rule 2330: Customers’ Securities or Funds

Rule 3110: Books and Records

Rule 2740: Selling Concessions, Discounts and Other Allowances

Rule 2420: Dealing With Non-Members

Rule 3010: Supervision

Rule 3050: Transactions for or by Associated Persons

Rule 2210: Communications With the Public

Rule 2711: Research Analysts and Research Reports

Rule 3030: Outside Business Activities of an Associated Person

Rules 3030 and 3040 and The Sale of Short-Term Promissory Notes

Case Study: Business Conduct

Insider Trading

Who is Covered by Insider Trading Restrictions

Use of Confidential Information

Front Running Client Transactions

Penalties for Insider Trading

Case Study: Insider Trading

Behavior Of Registered Representatives

Case Studies

Supervision Issues For Sales Managers

Chain of Command and Accountability

Compliance Issues for the Sales Manager

Motivating Sales Representatives

Mission

Set Targets

Help Provide a Problem Free Environment for Sales Personnel

Recognize the Accomplishments of the Sales Staff and Provide Adequate Rewards

Sales/Staff Meetings

Monitoring Client Inquiries/Complaints

Case Study: Supervision

Regulatory Audits Or Inquiries

Visits From Your SRO, the SEC, or State Securities Agencies

Who to Notify in the Home Office

What to Do

How to Respond to “On-Site” Visits

Subpoenas and Document Requests

The Chain of Command

Registration Issues

Documentation Required

Disqualifications

When to Amend a Form U-4

Termination and the Form U-5

Quiz