2. Registration of Associated Persons

Transcription

1 2. Registration of Associated Persons Contents 2. Registration of Associated Persons A. Registered Person Background Review B. Non-Registered Person Background Review C. Registrations D. State Registrations E. Heightened Supervision F. Dual Registrations G. Registered Administrative Staff H. Retired Advisor Status I. Fingerprints J. Termination of Registered Persons K. Termination of Non-Registered Person L. Continuing Commissions M. Annual Meetings N. Annual Questionnaires O. Continuing Education Firm Element Regulatory Element Ethics Training.16 The Strategic Financial Alliance, Inc. Page 1 of 17 Rev

2 2.A. Registered Person Background Review Committee (Head of Operations, Advisor Relations, Chief Compliance Officer) Registrations As new Registered Persons are interviewed and become associated with SFA Conduct background reviews Verify completeness and accuracy of Form U4 Amend Form BR Verify that prospective Registered and Associated Persons are not subject to a Statutory Disqualification Evaluate the imposition of heightened supervision Registration files Form U4 Form U5 Forms BR s of reviews for Statutory Disqualifications All records of background reviews will be retained for three years after the termination of each Registered Person 1. Registrations, under the direction of the Chief Compliance Officer, will perform a background review for each prospective Registered Person. a. The background review will include the following where applicable: Review of CRD record; Review of most recent Form U5 (may be performed through CRD); Fingerprints submitted through FBI; Consumer Credit Report; Background Investigation Report through Business Information Group ( BIG ); Verification of post-secondary school education; and Letters sent to previous employers for the past five (5) years. 2. The background review records will be maintained in the Registered Person s registration file. All records of background reviews will be retained for three years after the termination of each Registered Person. The background review records of Registered Persons who are also employees of SFA will be retained in the respective personnel file maintained by Human Resources Director. 3. If a Form U5 has not yet been filed by the former broker/dealer employer, Registration will review when filed. Any previously unreported disclosures contained on the Form U5 will be noted. 4. The Committee will determine whether any such disclosures affect the consideration of associating a prospective Registered Person with SFA or, if the Registered Person has become associated with SFA, whether there should be reconsideration of the Registered Person s association with SFA. 5. In conjunction with its background review, Registration will obtain from each prospective Registered Person a list of all securities accounts maintained at outside broker/dealers and a list of all outside business activities in which the prospective Registered Person is engaged. 6. If prospective Registered Person is seeking to join SFA as an OSJ Manager, the Committee, in consultation with the Chief Supervisory Officer, will evaluate the experience and qualifications of the individual to perform required supervisory functions in addition to the aforementioned background review. The Strategic Financial Alliance, Inc. Page 2 of 17 Rev

3 7. Registration will prepare a summary of the background results for the Committee to review. The Committee will determine via a concensus whether the prospective Registered Person should be permitted to become associated with SFA. The Chief Supervisory Officer and Chief Compliance Officer will determine if the registration is contingent upon the implementation of heightened supervision plan. 8. As a matter of policy, SFA will not associate, in any capacity (registered or not), any individual who is the subject of a Statutory Disqualification. 9. Once approved by the Committee for registration, Registrations will provide each prospective Registered Person with: a. Registration Package containing all of the required forms and documents, including the Arbitration Disclosure required under FINRA Rule 2263; and b. A digital copy of the information recorded on the Registered Person s corresponding Form U4 through the CRD. 10. The Registered Person will review the information contained on the Form U4 and, if the information is accurate, he/she will apply a digital signature acknowledging his/her approval. Registrations will review the Form U4 to confirm it is complete and, upon doing so, authorize the submission of the Form U4 through FINRA s Central Registration Depository ( CRD ) system. 11. Registration is complete when the CRD evidences the registration has been approved through FINRA, the Registered Person s home state (where office is located) and any additional requested states. Registrations will notify the Registered Person, the respective OSJ Manager, and Home Office Staff. 12. Home Office Employees who become registered will not be considered by the Committee. Instead, approval is required by the Vice President (or designee) of the Employee s department and Chief Compliance Officer (or designee). Background and credit are reviewed by the Human Resources Manager (or designee) and discussed with Chief Compliance Officer. 2.B. Non-Registered Person Background Review Employing Registered Person OSJ Supervising Principals Registrations As new non-registered Persons become associated with SFA Conduct background reviews Verify that Associated Persons are not subject to a Statutory Disqualification Registration files Form NRF s of reviews for Statutory Disqualifications All records of background reviews will be retained for three years after the termination of each Associated Person 1. Non-Registered Associated Persons Employed by Registered Persons in Branch Offices a. Screening of each non-registered Associated Person by Registration will include: Access Person Profile; A review of CRD to determine if there is an existing record; Fingerprints submitted through FBI; Code of Ethics Certification; and Annual Holdings Report. The Strategic Financial Alliance, Inc. Page 3 of 17 Rev

4 b. Employing Registered Person is responsible for supervising and authorizing access to systems, Access Person s social media, outside business activities, and covering any fees related to fingerprinting and retention. c. OSJ Manager is responsible for reviewing the Access Person Profile; reviewing Annual Holdings and Quarterly Transaction Reports; and, requesting duplicate statements for outside brokerage accounts. d. Evidence of these reviews will be maintained in the registration file for each individual. All records of background reviews will be retained for three years after the termination of each Associated Person. 2. Non-Registered Home Office Employees. a. In addition to the items listed above, Home Office Employees will undergo public records search and credit check at time of hire. Home Office Employees are also subject to random credit checks during the course of their employment. b. These reports are requested and maintained by the Human Resources Director of the firm s parent company, SFA Holdings, Inc. Any irregularities or deficiencies will be reviewed by the Chief Compliance Officer. Consideration will be given to an employee s role and the information to which he or she has access. c. Home Office Employees are required to participate in annual AML and compliance training and education. 3. Non Registered Access persons are required to certify the Code of Ethics on an annual basis. 2.C. Registrations Registrations Chief Supervisory Officer OSJ Managers As amendments are warranted As commissions are paid In conjunction with annual compliance and outside business activity questionnaires review Verify Form U4 for Registered Persons are current and accurate Obtain (or attempt to obtain) Registered Person acknowledgements of amendments to Form U4 Provide copies of Form U4 amendments to Registered Persons who fail to provide acknowledgements of those amendments Provide Registered Persons with Arbitration Disclosure in conjunction with Form U4 amendments Detemine whether Registered Persons are properly qualified to effect transactions in various products Approve or reject proposed continuing commission arrangements Form U4 Acknowledgements (or attempts to obtain acknowledgements) of Form U4 amendments Notifications to Registered Persons of Form U4 amendments Evidence of delivery of Arbitration Disclosure Commissions system Continuing Commissions Addendum to Registered Representative Agreement Annual Compliance Questionnaires Outside Business Activity Questionnaires The Strategic Financial Alliance, Inc. Page 4 of 17 Rev

5 Form U4 (as well as amendments and related documents) will be retained for three years after the termination of a Registered Person s association with SFA Commission records and notices to the Compliance Department of registration discrepancies will be retained for three years s of continuing commission arrangements will be retained for three years after the arrangements have terminated 1. Form U4 Amendments a. Registered Persons must immediately notify Registrations in writing of any event requiring an amendment to his or her Form U4. b. Annually, Registered Persons attest to reviewing their respective Form U4 for accuracy as part of the Annual Compliance Questionnaire. c. OSJ Managers who become aware of any changes that should be made on the Form U4 of their supervised Registered Persons are required to monitor that those Registered Persons submit notification promptly to Registrations. d. Registrations will submit necessary Form U4 amendments through the CRD within 30 days of receiving notifcation from the Registered Person. Registration will request that the Registered Person submit a written or electronic acknowledgement of each amendment to his/her Form U4 (other than those that are administrative in nature, such as requests for examinations, requests for state registrations, or changes in the Registered Person s personal information). Copies of such acknowledgements will be maintained in the Registered Person s registration file with each amended Form U4. e. If a Registered Person fails to submit an acknowledgement of the Form U4 amendment within the filing time frame, Registrations may submit the amendment to FINRA and reflect on the Form U4 amendment (in the space specified for the Registered Person s signature) that no acknowledgement was obtained. Registrations will provide the Registered Person with a copy of the amended Form U4 that was filed and will maintain evidence of attempts to obtain the Registered Person s acknowledgement of the amendment. f. For each non-administrative Form U4 amendment filing, Registration will provide the Registered Person with a copy of the Arbitration Disclosure required under FINRA Rule of delivery will be maintained in the Registered Person s registration file. Forms U4 (as well as amendments and related documents). 2. Qualification by Examination a. OSJ Managers are required to determine if the Registered Persons they supervise are properly qualified (through successfully passing the appropriate registration examinations) before conducting or supervising any securities activities through SFA. b. Registrations will monitor reports through the Commissions System showing discrepancies between the registrations of the Registered Persons against the products for which commissions have been received. Unresolved discrepancies will be escalated to the Chief Supervisory Officer and/or Chief Compliance Officer. 3. Apprenticeship for Municipal Securities Activity If a Registered Person who has not had at least 90 days prior experience as a general securities representative, municipal securities representative, or limited representative investment company and variable contract products representative, or limited representative-government securities, the person must have a 90 day apprenticeship prior to executing municipal securities transactions. The OSJ Principal will monitor the 90 day period and certify that the newly hired person does not effect municipal securities trades and does not receive compensation related to municipal securities trades, even if the person has passed the appropriate examination. 4. SFA does not permit individuals to park their licenses at SFA. Anyone registered through SFA must be actively engaged in the firm s business. Periodically, the OSJ Manager will review all registrations of The Strategic Financial Alliance, Inc. Page 5 of 17 Rev

6 persons under his supervision and confirm that each registered person is functioning in a capacity that warrants continued registration. 5. The respective OSJ Manager is required to notify the Chief Compliance Officer, or designee, immediately if he or she becomes aware of any questionable business practices, customer complaints (written or verbal) or discrepancies are noticed. 6. The Chief Compliance Officer is responsible for investigating customer complaints, arbitration claims, and litigation, as well as any other matters that require disclosure on the Form U4 of a Registered Person. An amendment to the Registered Person s Form U4 disclosing the results of the investigation will be filed within 30 days of its completion. s obtained during the course of the investigation and documentation evidencing the basis for the conclusions reached as a result of the investigation will be maintained in the respective complaint or arbitration file. 7. In the course of reviewing annual compliance and outside business activity questionnaires, if information is identified that is inaccurate or non-current, the Registered Person and his/her OSJ Manager are to facilitate filing of the appropriate amendment. 2.D. State Registrations OSJ Managers Chief Supervisory Officer Head of Operations Home Office Principals As Registered Persons become associated with SFA As new customer accounts are established In conjunction with annual branch office examinations Confirm that each Registered Person is properly registered in the states where he/she expects to conduct and actually does conduct business Verify that transactions are only effected by Registered Persons in states where they are properly registered Review any instances in which a state seeks to limit a Registered Person s registrations Registration files and SFA s internal registration system Branch Office Review reports Memoranda of any reviews relating to state limitations on the registration of a Registered Person Registration records will be retained for three years after the termination of each Registered Person Customer new account forms will be retained for six years after each transaction is effected Branch Office Review reports will be maintained for three years after the report has been completed 1. State registrations. a. Required for Registered Person s home state;each state in which the Registered Person maintains an office or location; andstates in which Registered Person has clients or solicits business. b. Registrations will notify the Registered Person via and copy the OSJ Manager via when a requested registration is approved. c. CRD records are auto downloaded on an on-going basis into the commission system to reflect current state registration. The Strategic Financial Alliance, Inc. Page 6 of 17 Rev

7 2. Investment Adviser Representative ( IAR ) Registration. a. Registered Persons who associate as Investment Adviser Represenatives of SFA are also required to register as investment adviser representatives in the state(s) in which they maintain an office. b. SFA is an SEC registered investment adviser. As such, IAR registration is not required in most states other than the state where the office is maintained. However, certain states require a Notice Filing for IARs. The list of states changes from time to time. Prior to conducting business with advisory clients residing in other states, Registered Persons are required to consult Registration to determine whether they are also required to become registered as investment adviser representatives in those states. 3. OSJ Responsibilities a. Monitor that Registered Person is appropriately registered in the client s state of residence prior to approving a Client Account Form or a client transaction. 4. Branch Office Examinations a. A sample of customer accounts will be reviewed to confirm that assigned Registered Persons are registered in the states in which those customers reside. The results of these reviews will be reflected on Branch Office Review reports. Branch Office Review reports will be maintained for three years after the report has been completed. 5. State Restrictions on Registrations a. Instances where a state seeks to impose limitations of any kind on a Registered Person s registration status in that particular state, in consultation with the Chief Supervisory Officer, the Chief Compliance Officer will review to determine whether heightened supervision relative to the Registered Person is warranted. The Chief Compliance Officer will prepare and maintain a memorandum reflecting the results of these reviews. 2.E. Heightened Supervision Chief Supervisory Officer OSJ Principals Committee As warranted Supervisory Principal attestations Annual branch office examinations Evaluate whether heightened supervision is warranted Evidence the heightened supervision performed Evaluate the adequacy of heightened supervision and, where appropriate, amend it Evaluate whether heightened supervision should be continued or terminated Documentation evidencing periodic reviews of the activities of Registered Persons Memorandum setting forth whether heightened supervision is required and, if so, what that supervision will entail Memorandum evidencing modifications to or the termination of heightened supervision Supervisory Principal attestations Branch Office Review reports All memoranda and evidence of heightened supervision will be retained for three years after the termination of the Registered Person Branch Office Review reports will be retained for three years after the report has been completed The Strategic Financial Alliance, Inc. Page 7 of 17 Rev

8 1. Plans of Heightened Supervision may be imposed when it is determined that the risk or conflicts of interest associated with a prospestive or existing Registered Person can be addressed through additional supervisory steps and/or education. a. Prospective Registered Persons As part of the background investigation, disciplinary history, financial disclosures, and credit will be considered by the Committee to evaluate the potential compliance risk to SFA and its customers. A prospective Registered Person must also have acceptance and approval by the designated OSJ Manager prior to registration. When the Committee determines that heightened supervision is appropriate for a prospective Registered Person, the Chief Compliance Officer, the Chief Supervisory Officer and the OSJ Principal responsible for supervising the particular Registered Person will use the information obtained during the background review to outline the plan of heightened supervision, designed to address and mitigate the risks identified in the background review. b. State or Regulatory Agency Requirements Heightened supervision may also be imposed at the discretion of state and federal regulatory agencies as a condition of registration. These requirements will be considered by the Committee and OSJ Manager in determining whether or not to associate (or maintain the association of) the Registered person. c. Existing Registered Persons The Chief Compliance Officer, Chief Supervisory Officer and/or Head of Operations may confer to subject a Registered Person to heightened supervision if they determine such a plan is necessary to educate the Registered Person and/or mitigate risk to the firm. (Behaviors which cannot be addressed through a plan of heightened supervision agreed upon by the OSJ Manager and the above parties will result in the recommendation for termination.) 2. Heightened Supervision Agreement a. The Heightened Supervision Agreement will be prepared that identifies: The reason heightened supervision was imposed; The specific supervisory steps that will be taken; The OSJ Principal responsible for maintaining that supervision; How that supervision will be documented: And (where deemed appropriate) the period of time the enhanced supervision will be in effect. b. The Registered Person, the OSJ Manager, and the Chief Supervisory Officer must execute the Agreement. The Chief Supervisory Officer will maintain records for each plan of heightened supervision. This record will be maintained in the Registered Person s registration file for no less than three years. c. The OSJ Manager is responsible for reporting to the Chief Supervisory Officer as deadlines are reached. d. The Chief Supervisory Officer is responsible for monitoring the Agreement. e. The Chief Supervisory Officer may: Subject the Regsitered Person s branch to additional examinations; Alter the scope of the agreement. Such changes will be evidenced through an executed addendum to the agreement; Recommend disciplinary action against the OSJ Manager who fails to fulfill the obligations imposed by the Agreement; In consultation with the OSJ Manager and Chief Compliance Officer, terminate the Agreement ahead of schedule or extend the Agreement beyond the original termination date. s related to the Agreement will be maintained in the Registered Person s Registration File. 3. Heightened Supervision to Address Conflicts of Interest a. Where the revenue generated by a Registered Person comprises 20% or more of the total revenue generated by the OSJ, the respective Home Office OSJ Principal will perform a secondary review on a random sample of the Registered Person s transactions. b. Where the Registered Person also maintains a separate branch office location, a Home Office designee (principal and/or consultant) will participate in the OSJ Manager s examinations of that location. c. On a quarterly basis, Registrations will provide the Chief Supervisory Officer with a report identifying the subject Registered Persons. The Strategic Financial Alliance, Inc. Page 8 of 17 Rev

9 2.F. Dual Registrations OSJ Manager Principals Chief Supervisory Officer Committee As requests are made Approve or reject written requests for dual registration Verify that Registered Persons are not currently registered or associated with another broker/dealer CRD records evidencing dual registrations Written requests and written approvals or denials by the Chief Compliance Officer Memoranda from Chief Compliance Officer evidencing action to be taken regarding dually Registered Persons Evidence regarding approved and unapproved dual registration will be retained for three years after the Registered Person s registration with SFA is terminated 1. No Registered Person will be permitted to maintain dual registration with any broker/dealer or registered investment adviser outside of SFA without the prior written consent of the Registered Person s OSJ Manager and the Chief Compliance Officer and/or Chief Supervisory Officer. SFA s consent will further be evidenced by the Committee. a. Consideration must be given to: State limitations on dual registration; The purpose of the dual registration; The nature of the other firm; Conflicts of interest with SFA; and The Supervising Principal s willingness and ability to supervise the Registered Person and his/her securities and advisory related activities. 2. Chief Compliance Officer and/or Chief Supervisory Officer will confer with appropriate parties at the other firm. 3. All requests for dual registration must be submitted to the Chief Compliance Officer in writing. Final approval will be evidenced through filing of the Form U4 for new representatives, and through RegEd for existing representatives. New representatives will file via RegEd during the onboarding process. 2.G. Registered Administrative Staff OSJ Principals Head of Operations At the time of association with SFA At the time of qualification as Registered Administrative Staff Verify that registered administrative staff are not paid transactionbased compensation. Notation in registrations file confirming status of Registered Administrative Staff Job Description Documentation evidencing the classification of registered administrative staff will be maintained for three years The Strategic Financial Alliance, Inc. Page 9 of 17 Rev

10 1. Administrative staff may register ( Registered Admins ) in order to faciliate client service through, for example, effecting securities transactions on behalf of their clients or otherwise performing functions that require registration. Registered Admins are subject to the same supervision, qualifications and background investigation as any other Registered Person. 2. The employing Registered Person must provide a job description for the Registered Admin outlining the duties and responsibilities which will support the registered status. 3. Registered Admins are generally prohibited from soliciting or otherwise making investment recommendations to clients and from receiving commissions. Registered Administrative Staff will be coded in the commissions processing system to preclude transaction based compensation. 4. Because Registered Admins do not solicit or make recommendations, they are assessed lower weekly fees for E&O coverage. All fees related to registration will be charged to the respective Registered Person who employs the Registered Admin. 2.H. Retired Advisor Status Home Office Principals At the time of qualification Execute Retired Advisor Agreement Retired Advisor Agreement Documentation evidencing the classification of Retired Advisor will be maintained for three years 1. Retired Advisor status is for registered persons preparing to exit the securities and advisory business. The Retired Advisor Agreement must be completed and signed by the retiring advisor, receiving advisor, responsible OSJ Principal, and accepted by a Home Office Principal. a. Retired Advisor is required to: Maintain only home state registrations (RR and IA, if applicable); Be assigned to a registered branch; Follow obligations defined or implied by state and federal regulations and/or FINRA rules. b. Retired Advisor may not: Affiliate with another broker/dealer; Affilitate with a registered investment adviser d ifferent from the one with which he or she is registered on the effective date of the Retired Advisor Agreement; Actively sell or solicit new business. 2.I. Fingerprints Registration As warranted Obtain fingerprints and transmit to FINRA Registration system record of transmittal of fingerprints Fingerprints will be evidence via Web CRD records The Strategic Financial Alliance, Inc. Page 10 of 17 Rev

11 1. SFA requires fingerprints for all Associated Persons, who have access to customer funds or securities or SFA s original books and records. Access to books and records includes, but is not limited to: Viewing customer information on-line or in hard copy; Data entry of customer information; Filing customer records; Photocopying customer applications or supporting documentation; Receiving and sending checks or wires; Depositing checks on behalf of SFA; or Handling SFA s payroll or personnel records. 2. SFA has contracted with Business Information Group ( BIG ) for electronic fingerprinting services. If associated person does not have access to electronic fingerprinting services Registration will transmit paper fingerprint cards to FINRA. If SFA is notified that the fingerprints of a Registered Person or Associated Person are illegible, Registration will promptly obtain and submit replacement fingerprints. 3. All fingerprint cards submitted to FINRA are forwarded to the Federal Bureau of Investigation ( FBI ) for purposes of a criminal background check. If the FBI returns results of a Criminal History (CHRI), the CHRI will be noted and reviewed. The Chief Compliance Officer or designee will determine whether the results affect the consideration of associating an individual with SFA or, if the individual has become associated with SFA, whether there should be reconsideration of the association with SFA. 4. Persons who have been convicted of theft, forgery or misappropriation of any kind, or who have been convicted of any felony, may be statutorily disqualified under Article III, Section 4 of FINRA s By-Laws. As a matter of policy, SFA does not permit the association or employment of statutorily disqualified persons. 2.J. Termination of Registered Persons Registrations Head of Operations As warranted File amended Form U5 on a timely basis Provide each former Registered Person with a copy of his/her Form U5 on a timely basis Investigation of matters that warrant a YES answer on Form U5 Form U5 and evidence of date filed Evidence of providing a copy of Form U5 to the former Registered Person s of all documentation regarding any matters resulting in YES answers on Form U5 Documents associated with the termination of a Registered Person s association with SFA will be retained for three years after that termination is effective 1. Registrations is responsible for submitting a Form U5 to CRD on behalf of any Registered Person who requests termination of his/her registration with SFA. a. The Form U5 is to be filed within 30 days of the date of receipt of the individual s resignation notice; b. A copy is provided to the individual when the Form is filed with CRD; c. SFA will retain a copy of the termination letter to evidence its providing the Registered Person with a copy of the Form. The Strategic Financial Alliance, Inc. Page 11 of 17 Rev

12 2. Registered Persons who are terminated for any reason are required to: a. Immediately cease transacting business through SFA; b. Cease holding out the association with SFA in communications, including electronic and internet based communications. 3. Upon notification that a Registered Person has been terminated, Registration will instruct the Head of Operations to: a. Terminate individual s ability to access SFA s clearing firm; b. Terminate access to SFA s systems (including Docupace); and c. Restrict the payment of commissions to that individual. 4. Generally, SFA will continue to pay commissions for up to 60 days after termination on transactions which were effected prior to the termination. Documents associated with the termination of a Registered Person s association with SFA will be retained for three years after termination is effective. 5. The Chief Compliance Officer is responsible for investigating customer complaints, arbitration claims, litigation. The results of the investigation will be disclosed in an amendment to the Registered Person s Form U5. Documentation of the investigation and and results will be maintained in the respective Complaint File. 6. If a former Registered Person is the subject of a customer complaint, arbitration claim, litigation, or a regulatory proceeding, an amended Form U5 should be filed on behalf of that individual in a timely manner, if applicable, containing the appropriate disclosures of the incidents that occurred. A copy of the amended Form U5 will be sent to the former Registered Person at the time the Form is submitted to CRD. SFA will retain a copy of the amended Form to evidence their providing the Registered Person with a copy of the Form U5. 7. The Chief Supervisory Officer, Chief Compliance Officer and Committee may confer to impose a Termination for Cause of Registered Persons whose sales practices and/or business practices are determined to conflict with acceptable business practices. 2.K. Termination of Non-Registered Person Employing Registered Person OSJ Supervising Principals Registrations Head of Operations As warranted File amended NRF Termination Registration files Form NRF Documents associated with the termination of a Non-Registered will be retained for three years after that termination is effective 1. The Employing Registered Person is responsible for notifying registrations when a Non-Registered Person is no longer employed. 2. Registrations is responsible for submitting a Form NRF Termination through CRD. 3. Upon notification that a Non-Registered Person has been terminated, Registrations will instruct the Head of Operations to: a. Eliminate that individual s access to SFA s clearing firm s systems; and b. Terminate access to SFA s systems (including Docupace). 4. When Non-Registered Person is seasonal or works intermittently: a. If not working in the Registered Person s office for 30 or more days, Registered Person is responsible for contacting Head of Operations to turn off access to all systems until the person returns to work; and The Strategic Financial Alliance, Inc. Page 12 of 17 Rev

13 b. If the Non-Registered Person will not work in the office for six or more months, then a Form NRF Termination will be filed and the person will be required to submit new fingerprints prior to receiving access to SFA s or clearing firm s systems. 2.L. Continuing Commissions Head of Operations Registrations As warranted File amended Form U5 on a timely basis Provide each former Registered Person with a copy of his/her Form U5 on a timely basis Investigation of matters that warrant a YES answer on Form U5 Executed Continuing Commissions Agreement Evidence of a triggering event. Documentation related to contacting former clients. Documents associated with the Continuing Commissions Agreement will be retained for three years after the termination of the Agreement. 1. Registered Persons may enter into a Continuing Commissions Agreement which allows the retired Registered Person or his/her beneficiary or estate to receive commissions for up to five years following the retirement, death or disability ( triggering events ) of the regsitered Person. 2. This arrangement is available only to Registered Persons who have been associated with SFA, in good standing, for at least three years prior to a triggering event. 3. The retired Registered Person must not associate with any other broker/dealer, investment adviser or insurance company in order to receive continuing commissions. 4. The Agreement will specify a Receiving Advisor who will continue to service the clients after a triggering event. If no Receiving Advisor is designated, SFA will engage an existing Registered Person to assume responsibility for servicing the clients. 5. A retired or disabled Registered Person who receives Continuing Commissions may not contact former clients (related to investments or accounts). Annually, Compliance will contact a sample of clients on whom continuing commissions are paid to monitor that no contact related to the businss is made. 2.M. Annual Meetings Chief Supervisory Officer Designated Home Office Principals OSJ Supervising Principals Annually Conduct an annual compliance meeting with all Registered Persons Copies of compliance meeting outline and presentation materials The Strategic Financial Alliance, Inc. Page 13 of 17 Rev

14 Evidence of attendance Outlines, presentation materials, and evidence of attendance at annual compliance meetings will be retained for three years after the completion of each meeting 1. A compliance meeting will be held with each Registered Person of SFA at least annually to discuss and review relevant compliance issues. An Annual Compliance Meeting ( ACM ) will be included in the SFA National Conference. a. Additional ACMs may be held: In conjunction with annual branch office examinations Delivered through webinars; or Conducted at local or regional meetings of registered persons. 2. An agenda will be prepared under the direction of the Chief Compliance Officer which will outline the topics to be covered in the meeting. 3. Applicable presentation materials will be prepared and provided to those Supervisory Principals authorized by the Chief Supervisory Officer to conduct the meetings. Copies of the outline and the presentation materials will be maintained by the Compliance Department. 4. The Compliance Department will monitor attendance at each annual meeting by all of SFA s Registered Persons. The Chief Supervisory Officer, in consultation with the Chief Compliance Officer, will determine what action, if any, should be taken if a Registered Person fails to attend a meeting. The Chief Supervisory Officer will maintain a record reflecting what action, if any, is taken and the basis upon which that determination was made. 5. Outlines, presentation materials, and evidence of attendance at annual compliance meetings will be retained for three years after the completion of each meeting. 2.N. Annual Questionnaires Chief Supervisory Officer Designated Home Office Principals OSJ Supervising Principals Annually Completion and review of Annual Compliance Questionnaires Review of re-certification of Outside Business Activity Questionnaires Annual Compliance Questionnaire Form Outside Business Activity form Identification and follow up on Annual Compliance Questionnaire and Outside Business Activity Questionnaire exceptions Forms and documentation relating to exceptions will be retained for three years after the termination of the Registered Person 1. By the end of each calendar year, all Registered Persons are required to: a. Complete an Annual Compliance Questionnaire (ACQ) b. Certify the Code of Ethics c. Re-certify their Outside Business Activity Quesitonnaires (OBAQ) The Strategic Financial Alliance, Inc. Page 14 of 17 Rev

15 2. The ACQ, Certification and OBAQ will be delivered through RegEd (or the then current web-based provider). 3. Compliance Analyst(s) will review questionnaires by the end of the first quarter on the following calendar year. a. Exceptions will be discussed with the respective OSJ Manager and the Chief Compliance Officer for education and/or corrective action. b. OBAs will be reviewed and approved through RegEd and amendments to Form U4 filed in accordance with Section 2.C.1 above. 4. The Chief Supervisory Officer, in consultation with the Chief Compliance officer may impose disciplinary action, including letters of caution and holding of commissions, for those Registered Persons who do not complete the annual requirements. 2.O. Continuing Education 1. Firm Element Compliance Manager Registrations OSJ Prinicpals Annual preparation of the Needs Assessment and Firm Element plan As warranted for Regulatory Element requirements As warranted for Ethics Training Prepare Needs Assessment Prepare Firm Element program and verify that all Registered Persons complete it Confirm that all Registered Persons complete the Regulatory Element as required Needs Assessment RegEd system Evidence of satisfaction of the Firm Element and the Regulatory Element Sign-in Sheets or other documenation related to Ethics Training The Needs Assessment and Firm Element training program will be retained for three years Evidence of completion of the Firm Element and Ethics Training will be retained for three years Evidence of failure to complete the Regulatory Element will be retained for three years a. Annual Assessment Compliance Analyst(s), under the direction of the Chief Compliance Officer, will conduct an annual assessment to identify current industry issues, rule changes, or other topics for the continuing education program. The OSJ Managers will be surveyed for input. Assessment will provide the basis for the Firm Element of SFA s Continuing Education program. The Compliance Analyst is responsible for developing, implementing and maintaining evidence of the Firm Element program. The Needs Assessment and Firm Element training program will be retained for three years. b. The Firm Element Program will be delivered through RegEd (or the then current web-based provider). The Strategic Financial Alliance, Inc. Page 15 of 17 Rev

16 c. Each year, the Compliance Analyst will notify all Registered Persons of SFA s Firm Element requirement and the deadline for completing that requirement. d. Upon registration, new Registered Persons are required to complete a set of educational courses, including AML, Communications and additional courses as may be determined ( Onboarding Courses ). e. Those who become registered with the firm between July 1 and December 31, may have certain Firm Element course requirements waived upon completion of Onboarding Courses, as determined by the Chief Compliance Officer or designee. f. Firm Element course requirements may be waived for similar courses completed through professional designations or insurance licensing requirements, as determined by the designated Compliance principal. g. The Chief Supervisory Officer, in consultation with the Chief Compliance officer may impose disciplinary action, including letters of caution and holding of commissions, for those Registered Persons who do not complete the Firm Element requirements. h. Evidence of completion of the Firm Element will be retained for three years. 2. Regulatory Element a. Registrations will confirm that all Registered Persons fulfill the Regulatory Element of Continuing Education. b. CRD sends daily notifications identifying Registered Persons who are subject to the Regulatory Element requirement. c. Registrations will notify Registered Persons of their Regulatory Element requirements and issue reminders to each Registered Person (with copies delivered to his/her OSJ Manager or the Chief Supervisory Officer) on a regular basis until the requirement is satisfied. d. If a Registered Person fails to complete the Regulatory Element within the 120-day period allotted, Registrations will notify SFA s Operations Department to change the individual s registration status to inactive so that the individual is prohibited from conducting any business or receiving compensation until the Regulatory Element is completed. e. Failure to complete the Regulatory Element may result in termination. f. Evidence of failure to complete the Regulatory Element will be retained for three years. 3. Ethics Training a. Content As a registered broker/dealer and investment adviser, the Strategic Financial Alliance, Inc. (SFA) holds its employees to a high professional standard. SFA provides ongoing training to help ensure each supervised person is familiar with the firm s Code of Ethics, and conducts his or her securities and advisory business accordingly. SFA s Code of Ethics addresses: Professional conduct; Compliance with laws and regulations of government and self-regulatory organizations; SFA s policy on conflicts of interest, outside business interests, working in the best interest of clients and other business conduct standards; Reporting procedures; and Form ADV Disclosure. Through ongoing training, SFA informs, advises and educates its supervised persons about regulatory changes; SFA s procedures, including those related to suitability, supervision, safe guarding client information, and disclosing and mitigating conflicts of interests; and, industry best practices. b. Providers The Chief Compliance Officer is responsible for maintaining and implementing the firm s Code of Ethics. This responsibility includes the provision of training. c. Format Ethics training is provided through in-person meetings, webinars, web-based vendors (e.g., RegEd), and written communications. Training is delivered through SFA s Annual Compliance Meetings, Compliance Communications and OSJ Conference Calls. No less than bi-annually, specific ethics training is included in SFA s Firm Element Continuing Education Program, which is provided through an outside vendor (currently, RegEd). d. The Strategic Financial Alliance, Inc. Page 16 of 17 Rev

17 All registered persons are required to participate in the Annual Compliance Meeting. Compliance Communications are published on an ongoing basis and allow SFA to address ethical concerns as they arise. OSJ Conference Calls are conducted no less than quarterly, which allows for open discussion with all designated supervising principals. Ethics training is also included in the Firm Element Continued Education every two years to supplement the training received through compliance-related communications and meetings. e. Documentation Participation in ethics training is documented through physical or electronic sign-in sheets, or through evidence distribution in the case of Compliance Communications. RegEd training is documented in the RegEd system. Additionally, Advisers are required to certify that they have reviewed and understand SFA s procedures annually. The Strategic Financial Alliance, Inc. Page 17 of 17 Rev