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Industry Challenge
According to FINRA, one out of every eight brokers has one to four disclosures, which may include customer complaints, bankruptcy, certain criminal charges, regulatory action and termination. All of these can be leading indicators of potential risk. To protect investors, FINRA continues to place significant focus on risky sales practices. In 2014, FINRA has expanded its High Risk Broker program, created a dedicated Enforcement team, and is employing technology-enabled risk analysis to identify individuals and firms to prioritize surveillance and conduct focused examinations and enforcements.

Among the greatest challenges faced by broker-dealers is the ability to readily identify potential risk, on an ongoing basis, among the firm’s registered representative population before it causes reputational harm. For mid-sized to large firms, rep populations can number in the hundreds to thousands, exacerbating the oversight task. The inability to bring together the aggregate of compliance and other data, in precise views, to identify red flags that warrant immediate attention is core to the challenge.

A firm’s best defense is a sound, proactive compliance program, rigorous oversight of sales practices and rep behavior, and the employment of technology to identify potential risk at the earliest possible juncture.

RegEd Solution
RegEd SCORETM installs a powerful compliance control center that enables firms to proactively identify and calculate non-compliance and sales practice risk across their registered population.

Using RegEd SCORETM, firms can establish risk thresholds to pinpoint compliance deficiencies, identify exceptions and spot early, negative trends. The solution generates a risk profile at the individual, branch or regional level. Automatic notifications provide the ability to manage by exception, enabling Compliance to undertake timely and targeted remediation.

The Risk Control Center provides configurable compliance dashboards that enable stakeholders to identify trends and exceptions before the firm is exposed to potential risk. RegEd SCORETM enables compliance and audit professionals to make timely and sound decisions related to rep activities and supervision.

Powered by RegEd’s Compliance Data Warehouse, RegEd SCORETM aggregates compliance data from RegEd modules and FINRA Web EFT. The solution enables firms to readily assemble critical compliance data into meaningful views and set thresholds for Risk Alerts to reduce risk exposure presented by outliers. SCORE’s analytic and alert capabilities enable firms to establish a best practice bar for rep behavior. It also drives new levels of efficiency and increases compliance effectiveness while demonstrating a “culture of compliance” to regulatory examiners.

Distinguishing Capabilities


Risk Alerts Enable Proactive Risk Mitigation

  • Monitor changes across multiple risk areas, viewing data from RegEd modules and FINRA Web EFT.
  • Receive “red flag” Risk Alerts based on critical measures such as Termination, Criminal Disclosure, Judgment, Bankruptcy, Outside Business Activities, Complaints and Regulatory Actions.
  • Calibrate targeted alerts to compliance concerns such as Broker Migration (“Has this rep been with 3 or more firms in less than two years?”) or History with a Disciplined Firm (“Has this rep been associated with a firm that has been materially sanctioned?”).
  • Hierarchy-driven alerts enable firms to establish thresholds at an individual, branch or region level.


Risk Profiles Provide Complete View of Rep Risk

  • Presents a single, current, consolidated view of critical compliance data including disclosures, audits deficiencies, customer concerns, compliance questionnaires and data on file with the regulators.
  • Define thresholds and weigh each potential risk indicator on a configurable scale.
  • View data at any level of the firm’s hierarchy to analyze individual, group or regional profiles.


Risk Dashboards Deliver Comprehensive Views and Trending

  • Create custom dashboards of key metrics and configure focused views of specific compliance areas.
  • Includes widgets driven by FINRA WebEFT and RegEd compliance program data, including: Disclosures, Customer Concerns / Complaints, Advertising Review, Compliance Questionnaire deficiencies, Outside Business Activities, and Branch Office Exam deficiencies.
  • Analyze rep behavior and sales practice trends over time, by individual rep, branch or region, to isolate negative trends that warrant attention and to identify best practices related to hiring and supervision.
  • Employ RegEd’s embedded hierarchy to create detailed views at the firm, branch or individual level, which can be saved in the RegEd SCORETM Widget Library for later re-use.