Heightened Supervision Measures are Seriously Lacking Amongst NASAA Members

The (NASAA) has been looking into whether its broker-dealer members are adhering to heightened supervision procedures. 
On Tuesday NASAA posted its findings of an examination where members of the regulator conducted 165 exams of 121 broker-dealers. This included wirehouse, independent and introducing firms. The results showed that the procedures in place to monitor representatives was seriously lacking.

Heightened supervision, as the term implies, means that in certain instances, firms are required to monitor employees or associated members more closely. This is specifically for representatives who have a history of misconduct.
Regulators such as the (FINRA) and the (SEC) require firms to have measures in place that assess whether heightened supervision is appropriate. FINRA has emphasized that this process needs to be tailored on a case-by-case basis.
The Examination Findings
In its examination, NASAA found that many of the companies that were surveyed were not taking these measures seriously. In fact, nine of the total firms examined had no policies or procedures in place at all in relation to heightened supervision. In addition, 34 companies had no criteria in place to determine whether they need to include heightened supervision measures for new hires. An equal number also had no criteria for currently associated representatives. Furthermore, of the examined firms, 49 percent had nothing in place to decide how a registered representative could be removed from heightened supervision.
The President-elect of NASAA Frank Borger-Gilligan oversaw the coordinated exams as the chair of the Broker-Dealer Section. He noted that of the examined firms, less than 25 percent had supervisors on site who were responsible for enforcing the measures.
Commenting on the findings, Borger-Gilligan said: “Cumulatively, these numbers indicate that there is much work to be done. NASAA encourages all firms to review their procedures to ensure they are acting in compliance and to develop heightened supervision procedures, including the removal of individuals from heightened supervision, where they may be lacking.”
Michael Pieciak Begins his Term as NASAA President
On Tuesday, Michael Pieciak was appointed as the 101st president of NASAA. During his address, he outlined his key focuses, which include modernizing the regulator’s operations and launching initiatives for millennial investors, cybersecurity, financial technology, cryptocurrency enforcement matters, multijurisdictional enforcement matters, and standards of care.