FINANCIAL & OPERATIONS PRINCIPALS
Every FINRA broker-dealer is required to have an individual designated as the Financial & Operations Principal. This individual must be qualified by experience and by passing an industry qualification examination (series 27 or 28 examination).
The “FINOP” is responsible for the final approval and accuracy of all financial reports submitted to any securities regulator. The FINOP is also responsible for the supervision and performance of financial responsibility rules. My team and I can provide the expert guidance to help you discharge your responsibilities as FINOP or as we do in many situations register a FINOP with your broker-dealer.
Every FINRA broker-dealer must maintain numerous “books and records” to record its daily activities and to demonstrate compliance with industry requirements during regulatory audits. My FINOP team can provide its expertise to you in the preparation and maintenance of these records including, among many others, posting the broker-dealer’s financial books and records, such as recording of invoices receivable and payable, recording clearing firm activities, maintaining the broker-dealer’s General Ledger, maintaining the Cash Receipts Journal, Cash Disbursements Journal, and completion of monthly bank reconciliations.
In addition, my FINOPs can produce monthly Financial Statements, including among others, a Balance Sheet, Income Statement, Statement of Cash Flows, and Trial Balance.
My FINOP team can produce monthly net capital computations and provide services with regard to the identification and appropriate treatment of allowable and non-allowable assets, identification and appropriate treatment of aggregate indebtedness and other liabilities, identification and appropriate treatment of charges and deductions, identification of appropriate minimum net capital amount.
Finally, assistance is available with regard to the administration of expense sharing agreements with affiliates in compliance with industry interpretations; Administration of broker-dealer subordinated loan agreements with owners and third parties in compliance with industry regulations; and Proper capital contributions and withdrawals recognition and reporting in accordance with industry regulations and interpretations.
Please contact me to discuss how I can greatly decrease the burden of financial compliance you may be experiencing at this time.
FINRA member firms are required to compose and submit FOCUS reports to FINRA pursuant to SEC Rule 17a-5. FOCUS is an acronym for “Financial and Operational Combined Uniform Single report” and is used to track a particular broker-dealer's activity over a set period of time.
FOCUS reporting is essential for all broker-dealer registrations, and for continued compliance status. A FOCUS Report consists of a balance sheet, an income statement, a statement of changes in ownership equity, and a complete net capital calculation.
FINRA staff review the FOCUS Report to monitor the broker-dealer's financial trends and to determine if the firm has maintained net capital compliance which allows the broker-dealer to continue business as usual without disruption.
The FOCUS system requires broker-dealers to electronically submit these Reports to FINRA. FOCUS Reports are submitted on a quarterly or monthly basis depending on the broker-dealer's business model by a Series 27 or a Series 28 licensed Financial and Operational Principal, otherwise known as "FINOP." A FINOP registered with the broker-dealer will ensure firms fulfill their obligation to file FOCUS Report(s) by required due dates.
FINRA broker-dealers are subject to multiple financial reporting requirements to the regulators. My team and I can provide our expertise to help you meet these industry requirements including: Monthly reporting to FINRA district office of financial and net capital position as required; Completion and filing with FINRA of monthly or quarterly FOCUS Report (a combined regulatory financial statements/net capital computation report); and work with the broker-dealer’s independent auditor with regard to the annual audit of your broker-dealer’s Financial Statement.
Every FINRA broker-dealer must constantly be in what is referred to as “net capital compliance”. The net capital rule is a regulatory liquid net worth calculation which obligates a broker-dealer to at all times maintain liquid net worth appropriate for its business operations. If a broker-dealer fails to maintain the appropriate amount of “net capital” it must immediately cease operations and notify the regulators of this fact.
My FINOP team can provide its expertise to help you meet this critical industry regulation including, Determining and monitoring compliance with the Net Capital Rule; Identifying deductions and charges appropriate to your broker-dealers business operations; Determining mandated net capital requirement based on your broker-dealers business operations; and providing your broker-dealer with a month-end computation to demonstrate net capital compliance.
The protection of customer funds and securities is paramount to the regulators. If a broker-dealer is “holding” customer funds or securities detailed procedures must be documented and followed regarding both the segregation of customer funds and the possession and control of customer securities. Most broker-dealers are able to operate under an exemption from this rule if they adhere to strict policies and procedures regarding customer funds and securities. My FINOP team can provide its expertise to monitor compliance with the exemptions to the rule.