(1) Every broker-dealer registered, or
required to be registered, under the Act shall exercise diligent supervision
over the activities of its agents and associated persons.
(a) Each agent and other associated person
shall be subject to the supervision of a designated supervisor.
(b) Written procedures, a copy of which shall
be kept or capable of being accessed in each Office of Supervisory Jurisdiction
("OSJ"), shall be established, maintained and enforced, and shall set forth the
standards and procedures adopted to comply with the requirements imposed by the
Act and the Rules, including, but not limited to, the following:
1. Administrative review and written approval
of all new customer accounts;
2.
Periodic examination of customer accounts to detect and prevent irregularities
or abuses;
3. Prompt administrative
review of all customer complaints and arbitrations;
4. Prompt administrative review of
correspondence pertaining to the solicitation and execution of securities
transactions; and
5. The review by
the designated supervisor, and his or her written approval, of the delegation
by any customer of discretionary authority with respect to his or her account,
and the frequent, periodic examination of all such discretionary accounts to
prevent irregularities or abuses.
(c) Each registered agent, individually or
collectively, shall participate, not less than annually, in an interview or
meeting conducted by persons designated by the broker-dealer at which
compliance matters relevant to the activities of the agent(s) are discussed.
Such interview or meeting may occur in conjunction with the discussion of other
matters and may be conducted at a central or regional location or at the
agent's place of business.
(d) Each
broker-dealer shall conduct a review, at least annually, of the businesses in
which it and its registered agents engage that shall be reasonably designed to
assist in detecting and preventing violations of, and achieving compliance
with, the Act and the Rules. Each broker-dealer shall review the activities of
each of its offices, including periodic examinations of customer accounts to
detect and prevent irregularities or abuses, and each broker-dealer shall
conduct at least an annual inspection of each OSJ. Each branch office of the
broker-dealer shall be inspected according to a cycle that shall be set forth
in the broker-dealer's written supervisory and inspection procedures. In
establishing such a cycle, the broker-dealer shall give consideration to the
nature and complexity of the securities activities for which the location is
responsible, the volume of business done and the number of associated persons
assigned to the location. Each broker-dealer shall retain a written record of
the dates upon which each review and inspection is conducted.
(e) It shall be the responsibility of each
broker-dealer and supervisor to ascertain that all agents are properly
registered, as required by the Act and the Rules, prior to making offers or
sales of securities.
(f) It shall
be the responsibility of each broker-dealer and their supervisors to ensure
that all associated persons of such broker-dealer are properly trained
regarding the disclosure requirements and the civil and criminal liability
provisions of the Act.
(g) It shall
be the responsibility of each broker-dealer and their supervisors to approve
all outside investment and securities business activities of each agent prior
to the agent engaging in such activity.
(2) It shall be the responsibility of each
broker-dealer to ensure that all broker-dealer and agent disciplinary data
required by the Act and these Rules is promptly and accurately reported in
accordance with the requirements of the CRD, or as the Commissioner may
designate for broker-dealers that are not registered with the SEC, are not
members of FINRA or are not members of any national securities exchange
registered with the SEC.
(3) Every
issuer who employs any broker-dealer or agent in connection with the sale of
securities shall comply with the supervision requirements as set forth in the
Act and these Rules.
O.C.G.A. Secs.
10-5-31, 10-5-35, 10-5-70, 10-5-74.
