Is your home a branch office?

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Oct 5, 2005 9:02 am

NOW IN EFFECT.  MAKE SURE YOU ARE AWARE OF THE NEW DEFINITION OF A BRANCH OFFICE.


NASD will announce the effective date of the amended definition and<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /><?:NAMESPACE PREFIX = O />


interpretive material in a Notice to Members to be published shortly.


3010 Supervision


(g) Definitions


(2) (A) A ‘‘branch office’’ is any location where one or more associated persons of a


member regularly conducts the business of effecting any transactions in, or inducing or


attempting to induce the purchase or sale of any security, or is held out as such, excluding:


(i) Any location that is established solely for customer service and/or back office type


functions where no sales activities are conducted and that is not held out to the public as a


branch office;


(ii) Any location that is the associated person’s primary residence; provided that:


a. Only one associated person, or multiple associated persons, who reside at


that location and are members of the same immediate family, conduct business at the


location;


b. The location is not held out to the public as an office and the associated


person does not meet with customers at the location;


c. Neither customer funds nor securities are handled at that location;


d. The associated person is assigned to a designated branch office, and such


designated branch office is reflected on all business cards, stationery, advertisements


and other communications to the public by such associated person;


e. The associated person’s correspondence and communications with the


public are subject to the firm’s supervision in accordance with Rule 3010;


f. Electronic communications (e.g., e-mail) are made through the member’s


electronic system;


g. All orders are entered through the designated branch office or an electronic


system established by the member that is reviewable at the branch office;


h. Written supervisory procedures pertaining to supervision of sales activities


conducted at the residence are maintained by the member; and


i. A list of the residence locations is maintained by the member;


(iii) Any location, other than a primary residence, that is used for securities business


for less than 30 business days in any one calendar year, provided the member complies


with the provisions of paragraph (A)(2)(ii)a. through h. above;


(iv) Any office of convenience, where associated persons occasionally and


exclusively by appointment meet with customers, which is not held out to the public as an


office;*


(v) Any location that is used primarily to engage in non-securities activities and from


which the associated person(s) effects no more than 25 securities transactions in any one


calendar year; provided that any advertisement or sales literature identifying such


location also sets forth the address and telephone number of the location from which the


associated person(s) conducting business at the non-branch locations are directly


supervised;


(vi) The Floor of a registered national securities exchange where a member conducts


a direct access business with public customers; or


(vii) A temporary location established in response to the implementation of a business


continuity plan.


(B) Notwithstanding the exclusions provided in paragraph (2)(A), any location that is


responsible for supervising the activities of persons associated with the member at one or more


non-branch locations of the member is considered to be a branch office.


(C) The term ‘‘business day’’ as used in Rule 3010(g)(2)(A) shall not include any partial


business day provided that the associated person spends at least four hours on such business day


at his or her designated branch office during the hours that such office is normally open for


business.


____________


* Where such office of convenience is located on bank premises, signage necessary to comply


with applicable federal and state laws, rules and regulations and applicable rules and regulations


of the NYSE, other self-regulatory organizations, and securities and banking regulators may be


displayed and shall not be deemed “holding out” for purposes of this section.


* * * * *


IM–3010–1. Standards for Reasonable Review


In fulfilling its obligations pursuant to Rule 3010(c), each member must conduct a


review, at least annually, of the businesses in which it engages, which review must be reasonably


designed to assist in detecting and preventing violations of and achieving compliance with


applicable securities laws and regulations and with NASD Rules. Each member shall establish


and maintain supervisory procedures that must take into consideration, among other things, the


firm’s size, organizational structure, scope of business activities, number and location of offices,


the nature and complexity of products and services offered, the volume of business done, the


number of associated persons assigned to a location, whether a location has a principal on-site,


whether the office is a non-branch location, the disciplinary history of registered representatives


or associated persons, etc. The procedures established and the reviews conducted must provide


that the quality of supervision at remote offices is sufficient to assure compliance with applicable


securities laws and regulations and with NASD Rules. With respect to a non-branch location


where a registered representative engages in securities activities, a member must be especially


diligent in establishing procedures and conducting reasonable reviews. Based on the factors


outlined above, members may need to impose reasonably designed supervisory procedures for


certain locations and/or may need to provide for more frequent reviews of certain locations.


* * * * *

Oct 5, 2005 7:36 pm

if we only didn't have lawyers, we wouldn't be putting up with the paperwork we now handle.

Oct 5, 2005 10:55 pm

O.K. I'll bite, how does this affect Jones ? I know of rep who is still working out of his home after 11 months.

Oct 6, 2005 7:32 am

can you say "fee grab"


Guess which firm of the greatest salepeople in the world is flipping out about this requirement 'cuz all they had were "sub-branches" and the "branch manager" (a.k.a. FSD a.k.a. Field Supervision Director) was located in St.Louis?


Hey Steve do you know if the new classification of "branch" will require a properly qualified Branch Manager at each branch?