When the regulators show up at the door to conduct an inspection, will you be ready? Through our participation in more than 100 regulatory examinations as outsourced Chief Compliance Officers, we provide expert guidance to clients through FINRA Mock Audits.

Our FINRA Mock Examination team is comprised of former FINRA, SEC, CFTC and MSRB regulators, in-house compliance officers and attorneys with collectively over 275 years of experience across all asset classes and investment strategies.

We offer cost-effective solutions that are flexible and tailored to meet our clients’ specific needs.

A FINRA Mock Examination replicates a typical FINRA examination (tailored to the Firm’s specific business activities) and provides an assessment of the effectiveness of the Broker-Dealer’s compliance program performed by way of inspection of Broker-Dealer records in response to typical advance FINRA document and information requests, detailed interviews of key Broker-Dealer personnel, and pertinent trend and focused forensic testing of the Broker-Dealer and employee processes and activities designed to uncover material gaps and/or weaknesses in the Broker-Dealer’s regulatory compliance control environment.

Alaric’s reviews employ processes and techniques frequently encountered in FINRA inspections.The Assessment will focus upon the thoroughness of coverage, suitability of design and effectiveness of implementation of the controls comprising the broker dealer’s compliance program.

The specific areas covered in the examination will be customized based on the firm’s areas of risk and may include some of the following:

  • Annual Review processes
  • Anti-Money Laundering
  • Annual Compliance Meetings
  • Advertising and Marketing
  • General Sales Practices
  • Books and Records
  • Personal Trading Activities
  • Protection of Material Non-Public inside Information
  • Registrations and Filings
  • Customer Account Files
  • Trading
  • Conflicts of Interests
  • Best Execution
  • E-mail and Other Communications Technologies
  • Regulation S-P
  • Business Continuity Plans
  • Private Placements
  • Trade reporting
  • Options trading
  • Soft Dollar Payments
  • Hard Dollar Payments
  • Research & Trading Ideas
  • Principal Trading
  • A Financials Records Review (not for Net Capital Computation Compliance)

Project Processes and Stages

The assessment will be conducted according to the following five stages:

Stage 1. Perform a thorough review of various documents and other information which the Firm will be requested to produce in response to a detailed request which Alaric will furnish two weeks prior to commencement of the onsite portion of the engagement.

Stage 2. Perform detailed interviews of the lead supervisors of and/or other appropriate representatives from all key functional areas of the Firm’s (i.e., marketing, trading, middle/back-office operations, financial reporting and control, investor service, legal, compliance, risk management and technology support).

Stage 3. Conduct forensic testing of the compliance program during the onsite portion of the engagement.

Stage 4. Prepare a summary narrative report which would set forth, on a risk-ranked topical basis, material findings regarding strengths as well as weaknesses (if any) in the Firm’s compliance program and, recommendations for such remedial action that may include additional testing, monitoring and other internal controls or processes as is indicated for the Firm to better conform with industry compliance best practices as well as the expectations of FINRA examiners and other regulators.

Stage 5. Discuss and review, in detail, with members of the Firm’s senior management Alaric’s findings and recommendations noted in the deliverables furnished at the conclusion of the project.

The material and information provided herein is for general informational purposes only.  You should not rely upon the material and information provided herein as a basis for making any business, legal or any other decisions.  Also note that actual proposals for FINRA Mock Examination Services are customized based upon the specific needs of the client at the time of the request.

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