2017 pennsylvania department of banking and securities ... · the revised form adv also includes...

2017 Pennsylvania Department of Banking and Securities Conference

October 26, 2017 – Camp Hill, PA

12017 PA Department of Banking & Securities Conference | Copyright 2017 FINRA

Topics of Discussion

Review of the 2017-2018 RAD Program RoadmapWeb CRD, Investment Adviser Registration Depository (IARD), BrokerCheck

and Investment Adviser Public Disclosure (IAPD)

Recent RAD System Enhancements

Revised Form ADV

Proposed Future Enhancements

2018 Renewal Program

Top 10 Tips for Registration Staff

Resources


Q3 2017 Q4 2017 Q1-Q2 2018

Web CRD, IARD, and PFRD Release (December 9, 2017 )• Allow electronic

Initial Form BD submissions

• Minor bug fixes

BrokerCheck Release(TBD)• BrokerCheck usability

enhancements (TBD)

IAPD Release(September 30, 2017)• Conforming changes

to support revised Form ADV

Q2 2017

Web CRD, IARD, and PFRD Release (TBD)• Changes in support

of Qualification Exam Restructure (deploys in Q4 2018)

• Bankruptcy and Judgment/Lien disclosure changes

BrokerCheck Release(TBD)• BrokerCheck usability

enhancements (TBD)

Web CRD, IARD, and PFRD Release (July 1, 2017)• Wyoming began

registering Investment Advisers (effective July 1, 2017)

• Minor bug fixes• Updated password

requirements (effective July 29, 2017)

Web CRD, IARD, and PFRD Release (September 30, 2017)• Revised Form ADV

with Schedule R • Changes to

Terminated Individuals Search

• Individual Disclosure Letter download

• Browser security upgrade

• E-Bill Auto-Fund Feature

Financial Professional Gateway Release (August 14, 2017)• TransUnion

integration pilot

Financial Professional Gateway Release (TBD)• Full industry launch

Financial Professional Gateway Release (TBD)• Ability to view U5

Filings

Public Disclosure programs

Registration programs

Transformation Initiatives

Web CRD Transformation (TBD)• Version 1 of Firm

Dashboard

2017-18 RAD Program Roadmap


SRO Updates

SRO Description of Activity Timeframe

BOX

Added the following registration categories:

• Member Exchange (ME) • Floor Employee (FE)

August 3, 2017

NYSE-AMER

Removed the following registration categories:

• Member Exchange (ME) • Floor Employee (FE)• Floor Clerk (FL)

October 1, 2017

Recent RAD System Enhancements


BrokerCheck Redesign – December 2016

FINRA launched a redesign that included a new look-and-feel and significant usability enhancements.


BrokerCheck Redesign – December 2016 (cont.)

BrokerCheck enhancements include: A clean, modern, engaging user interface Ability to view search results in either a tile or list format The ability to filter for individuals by type (broker, investment adviser), years

of experience, status (active, barred, etc.)

Search results include additional information such as disclosure indicators, years of experience, type of individual (broker, investment adviser).

Improved availability and performance resulting from the migration of BrokerCheck to the cloud.



Barred individuals are more clearly highlighted in the search results.

Users can click the “More Details” button to view a specific profile.



Users can click the “Show/Hide Filters” tab to use new filters to narrow their list of search results.



The Individual Summary page utilizes a tile format, with key items (such as disclosures) displayed near the top.

Suspended individuals are clearly identified.



Broker summary pages display the individual’s registration history in a vertical timeline for improved viewing on mobile devices.


Financial Professional Gateway

The Financial Professional Gateway provides representatives with streamlined access to the individual snapshot, CE Online, U4 rep edits, and current residential address updates (unregistered individuals within 2 years) – https://finpro.finra.org.

https://finpro.finra.org/


Updated Password Requirements

FINRA implemented changes to strengthen the password requirements for Web CRD & IARD.

Passwords created after July 29, 2017, must: Be 12-32 characters in length Include characters from 3 of the following 4 categories:

– Uppercase alphabet characters (A-Z)– Lowercase alphabet characters (a-z)– Numeric characters– Special characters (including spaces)

Not reuse any of the most recent 10 passwords Not include your first, middle or last name Not include your user ID Not include profanity, words of a vulgar nature, or commonly used words

identified by information security professionals


Updated Password Requirements (continued)

Additional updates for passwords created after July 29, 2017: Passwords will be valid for 180 days (increased from 90 days) New password auto-unlock feature:

– Password lockout occurs after 5 incorrect password attempts in a 1-hour period

– Password lockout will auto-unlock after 1 hour– Users may contact an account administrator at any time if they require a

manual password reset for any reason including a password lockout The password auto-unlock feature does not apply to the security question

lockout. Accounts locked out due to 5 incorrect attempts to answer the security challenge questions must be reset by an administrator.


Browser Security Upgrade

Effective September 30, 2017, the minimum browser requirements for Web CRD/IARD and related applications were updated to the following: Chrome versions released after 2011 (4 or higher) Firefox versions released after 2011 (4 or higher) Internet Explorer versions released after 2013 (11 or Edge) Safari versions released after 2013 (7 or higher)

Users that do not upgrade their browsers will not be able to access Web CRD/IARD.


Terminated Individuals Search

The separate Terminated Individuals Search functionality was removed.

Instead, a pop-up message regarding viewing terminated individuals will display once per browser session when a terminated individual is viewed.


Export Letters

An export feature was added to the individual ‘Outstanding Disclosure Letters’ queue, allowing users to obtain a CSV download of outstanding letters and details.


E-Bill

Firm users now have the option to set up their Flex-Funding Account to be automatically replenished if the balance falls below a specified amount.

Revised Form ADV

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Revised Form ADV

Form ADV changes approved by the Securities and Exchange Commission (SEC) were implemented as of October 1, 2017.

Highlights of SEC updates: Revisions to fill data gaps and to provide additional information about

investment advisers including their separately managed account business. Amendments to incorporate a method for private fund adviser entities

operating a single advisory business to register using a single Form ADV. Clarifying technical and other amendments to existing items and

instructions.


Sample Revision

For example, Item 5.D previously asked firms to select from options that reflected a range of approximate percentages.


Sample Revision (continued)

In the new form, Item 5.D has been reorganized and will require more specific answers (prior answers will not be pre-populated).


Completeness Checks

All filings created after the release will be in the new format and errors will display for any questions that must be re-answered. All completeness errors must be resolved before the filing can be

successfully submitted. (Screenshot below is for illustration purposes only.)


Schedule R – Relying Advisers

The revised Form ADV also includes the new Schedule R. Schedule R incorporates umbrella registration for private fund advisers,

consolidating in one location important information for each relying adviser. Schedule R will address inconsistent reporting due to the current Form ADV

not accommodating umbrella registration. Schedule R will be filed by the filing adviser and elicit identifying

information, basis for SEC registration, and ownership information about each relying adviser.


Schedule R – View Organization

Relying advisers listed on Schedule R will be viewable through the filing firm’s View Organization. Click the “View” link to view the details entered on Form ADV.


Schedule R – View Individual

Individuals listed as a Direct or Indirect Owner on Schedule R will have the association reflected on their individual CRD record.


Additional Information

For additional information about the revised ADV, please see the following resources: SEC rule filing: https://www.sec.gov/rules/final/2016/ia-4509.pdf Redlined form: https://www.sec.gov/rules/final/2016/ia-4509-form-adv-

summary-of-changes.pdf SEC FAQs: https://www.sec.gov/divisions/investment/iard/iardfaq.shtml SEC Information Updates: https://www.sec.gov/investment/im-information-

updates.html

SEC Division of Investment Management: 202-551-6699 [email protected]

https://www.sec.gov/rules/final/2016/ia-4509.pdf

https://www.sec.gov/rules/final/2016/ia-4509-form-adv-summary-of-changes.pdf

https://www.sec.gov/divisions/investment/iard/iardfaq.shtml

https://www.sec.gov/investment/im-information-updates.html

mailto:[email protected]


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Impacted Area Description of ChangeForm BD(Q4 2017)

Enable electronic submission of the Initial Form BD by new applicant firms (similar to the existing online firm initialization for Investment Advisers filing Form ADV).


Exam Restructuring and Consolidated Registration Rules

Enhance Web CRD and other FINRA systems in preparation for implementation of the Securities Industry Essentials Exam (SIE) and new top-off exam structure.

Essentials Exam

Series 6

Series 7

Series 22

Series 57

Series 79

Series 82

Series 86/87

Series 99

FINRA will also create a system for persons not associated with a member firm to enroll and pay for the Essentials Exam.

SEC approved proposed FINRA rule change (SR– FINRA–2017–007), in July 2017. FINRA Regulatory Notice:

http://www.finra.org/industry/notices/17-30 Deployment is slated for October 1, 2018.

http://www.finra.org/industry/notices/17-30

2018 Annual Renewal Program


2018 Renewal Program

Detailed information is available at: www.finra.org/renewals Preliminary Statements posted to E-Bill on Monday, November 13, 2017 Full payment is due Monday, December 18, 2017

http://www.finra.org/renewals


Other Renewal Reminders

Beginning October 23rd, firms are able to submit post-dated Forms U5 and BR Closing/Withdrawal (must be dated 12/31/2017). Post-dates Forms BDW and ADV-W may be submitted beginning

November 1st.

The following renewal payment methods are available: Automatic transfer from Flex-Funding account Electronic payment via E-Bill ACH or wire transfer Check

The Web CRD/IARD system shutdown begins at 6pm (ET) on December 26th, and full functionality will resume on January 2nd. The system will be available in a read-only mode during December 28-31.

Final Statements will be posted to E-Bill on January 2, 2018.



Pre-Qualifications Search

Form U4 Filing Types

Create CRD records for Foreign Associates

Correct Social Security Numbers

Bulk NRF Termination

Amend NRF Termination Dates

Re-Associate Fingerprint Cards

Firm Notifications

NASAA Exams

Form ADV Part 2 Upload Requirements


Pre-Registration Qualifications

Take the guesswork out of determining what an individual is qualified for by using the Individual Pre-Registration Qualifications function in View Individual.

Enter a projected U4 filing date up to 60 days in advance to see:What registration categories the individual is qualified for, organized by the

regulators the firm is a member ofWhether the individual is AG or RA qualified The individual’s current Continuing Education status, including current CE

window dates


Pre-Registration Qualifications


Form U4 Filing Types

Initial Use this filing type for an

individual that is new to the industry or has not been registered for more than 30 days.

Dual Use this filing type if the

individual is already registered and is now registering with another firm that is not affiliated with the first firm.

Amendment Use this filing type to add

registrations with multiple affiliated firms.

Relicense All Use this filing type to transfer all

registrations for an individual that has been registered in the past 30 days.

Relicense CRD Use this filing type to transfer

only RR registrations for an individual that has been registered in the past 30 days.

Relicense IA Use this filing type to transfer

only IAR registrations for an individual that has been registered in the past 30 days.


Form U4 – Create CRD Records for Foreign Associates

Firms were given the ability to create CRD records for foreign associates that do not have a Social Security Number (SSN).


Correct SSN

Entitled firm users can correct SSN errors on Form U4 and NRF.


Bulk NRF Termination

Firms are able to use the NRF Bulk Term feature to terminate up to 100 back-office individuals at a time. This feature can be useful as a “clean-up” tool for terminating outdated

fingerprint card associations.

Select the “Bulk Termination” option under Form NRF, and search for individuals to terminate. Tip – Leave the search page blank to return all NRFs at the firm.


NRF – Amend Termination Dates

Errors in Non-Registered Fingerprint person (NRF) termination dates can now be corrected through Individual NFI. Corrected dates are reflected in the Employment History in View Individual.


Re-Associating Fingerprint Cards

The Initial NRF form allows firms to re-associate fingerprints of representatives that were terminated with a Full U5 and have been continuously employed by the firm. Checking the “Re-Associate Fingerprints” box will prepopulate the following:

– Barcode of the most recently terminated card submitted by the firm– Individual’s original employment date with the firm


Email Notifications

Entitled users can elect to receive automatic email notifications whenever certain events occur. Firm notifications are located under ‘Organization Non-Filing Information’.


NASAA Exams – Series 66

To have an individual take the S66 instead of the S63/S65, complete the following on the Initial Form U4: Select the AG/RA positions in Section 5 Jurisdiction Registrations Specifically select the S66 checkbox in Section 7 Examination Requests


NASAA Exams – Refund Requests

NASAA allows individual states to submit refunds for S63/S65 if: The exam window has not expired There are no outstanding exam deficiencies with other states

Each S63/S65 refund request should include: The firm’s name and CRD number The individual’s name and CRD numberWhich exam window should be refunded Transaction number and date (from E-Bill)

Because the S66 exam must be specifically requested, refunds for S66 must be approved by NASAA.


Form ADV Part 2 Upload Requirements

In order to be successfully uploaded, brochures must: Be in PDF format Be text-searchable Contain at least 50 words

The following error displays when the above criteria is not met:

Files that are locked or password protected will inhibit the system’s ability to confirm the text requirements. All security on the PDF file must be removed in order to upload successfully.

Resources


User Testing

What is user testing? Current users volunteer to test new and changed system features before

they are implemented Participants are required to already have production access to the system

they would like to test

Why participate? Gain a better understanding of what is changing in an upcoming release Have an opportunity to provide your feedback

If you are interested, send your name and Firm CRD number to:Application Contact

Web CRD and IARD [email protected] EFT [email protected] [email protected]


Training Opportunities

Foundations of Web CRD/IARD: Beneficial for new and experienced users Hands-on overview of major system functionality Registration tips and best practices

Registration and Disclosure Boot Camp: Comprehensive training on entering disciplinary information into Web CRD Discussion of other “hot topics” and upcoming enhancements Networking opportunities with other firms and FINRA staff

Visit www.finra.org/crd/help for information on available training sessions (2018 schedule coming soon).

Contact [email protected] with questions about specialized CRD/IARD training specifically for your firm.

http://www.finra.org/crd/help



Other Resources

Web CRD Online Tools: www.finra.org/crd/help

– Quick Reference Guides– Frequently Asked Questions– Small Firm Resources– Release Notes– Regulator Fees & Settings

IARD Online Tools: www.iard.com/help-training

– Form Instructions– Quick Reference Guides– Frequently Asked Questions– System Availability– Regulator Fees & Settings

FINRA’s Gateway Call Center: FINRA Members:

– 301-869-6699– [email protected]

Investment Advisers:– 240-386-4848– [email protected]

http://www.finra.org/crd/help

http://www.iard.com/help-training




TEST SECURITYAn Overview

Questions

©2017 Financial Industry Regulatory Authority (FINRA). All rights reserved. Materials may not be reprinted or republished without the express permission FINRA. Individuals, firms and data mentioned in these materials are fictitious and are presented exclusively for purposes of illustration or example.

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