FINANCIAL PROFESSIONAL SITE
  

It's Friday and everyone is ready for the weekend! I have a couple of items that have come up recently and wanted you to keep in mind:

 

1. New Corporate accounts (LPs, LLCs, GPs C Corps, S Corps, Non-Profits) and Non-ERISA Self-Trusteed Qualified Plan accounts when opened will require additional due diligence under the FinCEN Customer Due Diligence rule. This new process goes into effect today. A March 26, 2018 Compliance Alert provided the Beneficial Ownership Certification that is required to document the beneficial owners of the entity for AML purposes. The form is on the Financial Professional Site under B-D.

 

2. Next week I will be sending out an updated Written Supervisory Policies and Procedures Manual (WSP) for the broker/dealer. It will include the new FinCEN rule and some other minor items.

 

3. Mutual Fund Switch Form - reminder that this is required if you are selling one mutual fund company and buying another mutual fund company for a client when sales charges are involved. Switches between mutual funds that result in potential additional sales charges for the client (whether front-end or back-end load) require that a letter be obtained from the client acknowledging an understanding of the consequences of the switch.The form is found on the Financial Professional Site.

 

4. Cashier's Checks - are they acceptable to deposit in a client's account? Yes, if the amount of the check is over $10,000. However, if a client brings in or sends to your office a cashier's check less than $10,000 - before accepting it, I want you toSTOP and think whether you would deposit CASH into the client's account. We all know the answer is NO, as you would not accept CASH as a deposit into a client's account.

 

Well, if you accept a cashier's check for less than $10,000 then you are basically accepting cash from the client according to the IRS' defintion of cash. Therefore, do not accept a cashier's checks for less than $10,000 for a client deposit since as per our WSP, we do not accept cash or cash equivalents into accounts. Clients should be advised to submit a personal check and the office should reject and return the cashier's check for less than $10,000 to the client. We will be reviewing this closely with documentation and disciplinary actions if needed on a go forward basis in order to keep everyone compliant.

 

5. Dead Man/Woman Trading - any trading authorization that you (if it is a discretionary account) or a POA had on an account ends when the client dies. Please follow the appropriate procedures and notify Operations so the account may be coded correctly. One of the first cases that I handled as a young attorney was representing an financial professional at a NASD hearing (OTR - On the Record) in which he traded in a deceased relative's account because his wife was a beneficiary. I will never forget the case and luckily the financial professional walked away with only a warning from the regulator instead of a fine. A gentle reminder - do not trade in a deceased client's account. It is not worth the cancel and rebill fees, any losses from the trades or potential legal fees/fines that may result. Contact Operations to appropriately code the account when a client passes away.

 

Any questions on these items, please let me know. Have a great weekend! Thanks, Renee