BROKER-DEALER COMPLIANCE MANUAL OUTLINE

Small Broker-Dealer Written Supervisory Procedures (WSP)

DOCUMENT INFORMATION

TABLE OF CONTENTS

1. Introduction and Firm Overview
2. Organizational Structure and Supervision
3. Registration and Licensing
4. Anti-Money Laundering (AML) Program
5. Customer Account Documentation
6. Suitability and Know Your Customer
7. Order Handling and Best Execution
8. Private Securities Transactions
9. Outside Business Activities
10. Communications with the Public
11. Books and Records
12. Net Capital Compliance
13. Customer Protection (Rule 15c3-3)
14. Regulatory Reporting
15. Cybersecurity and Business Continuity
16. Annual Compliance Review

SECTION 1: INTRODUCTION AND FIRM OVERVIEW

1.1 Purpose of This Manual

This Written Supervisory Procedures Manual establishes the policies, procedures, and supervisory controls designed to ensure compliance with:

☐ Securities Exchange Act of 1934 and rules thereunder
☐ FINRA Rules and Regulations
☐ SEC Rules and Regulations
☐ State securities laws
☐ Municipal Securities Rulemaking Board (MSRB) rules (if applicable)

1.2 Firm Description

1.3 Lines of Business

☐ Retail brokerage
☐ Institutional brokerage
☐ Private placements (Reg D)
☐ Municipal securities
☐ Investment banking
☐ Proprietary trading
☐ Market making
☐ Other: [________________________________]

1.4 Regulatory Memberships

☐ FINRA Member
☐ SIPC Member
☐ MSRB Registered (if municipal securities)
☐ Options Clearing Corporation (if options)
☐ Other: [________________________________]

SECTION 2: ORGANIZATIONAL STRUCTURE AND SUPERVISION

2.1 Supervisory Hierarchy

Principal Supervisory Structure:

2.2 Supervision Requirements (FINRA Rule 3110)

General Supervision:

☐ Each registered representative assigned to a supervisor
☐ Supervisors review and approve customer account activity
☐ Written approval required for all new accounts
☐ Trade review procedures established
☐ Correspondence review procedures established
☐ Branch office inspection schedule established

2.3 Supervisory Control Procedures (FINRA Rule 3120)

☐ Annual testing of supervisory procedures
☐ Risk-based sampling methodology documented
☐ Testing results documented and reviewed
☐ Deficiencies identified and remediated
☐ Annual report prepared for senior management

2.4 Designation of Chief Compliance Officer

SECTION 3: REGISTRATION AND LICENSING

3.1 Firm Registration Requirements

3.2 Associated Person Registration

Required Examinations:

3.3 Registration Procedures

☐ Form U4 filed for all associated persons
☐ Fingerprint cards submitted
☐ Background investigations completed
☐ Disclosure review completed
☐ State registrations maintained
☐ Continuing education requirements tracked

3.4 Termination Procedures

☐ Form U5 filed within 30 days of termination
☐ Termination reason documented
☐ Exit interview conducted
☐ Access credentials revoked
☐ Property returned and documented

SECTION 4: ANTI-MONEY LAUNDERING (AML) PROGRAM

4.1 AML Program Requirements (FINRA Rule 3310)

Program Components:

☐ Written AML compliance program
☐ Policies and procedures reasonably designed to detect suspicious activity
☐ Risk-based Customer Identification Program (CIP)
☐ Designated AML Compliance Officer
☐ Ongoing AML training
☐ Independent testing (audit)

4.2 AML Compliance Officer

4.3 Customer Identification Program (CIP)

Required Information for Individuals:

☐ Full legal name
☐ Date of birth
☐ Residential address (not P.O. Box)
☐ Identification number (SSN or government ID)

Required Information for Entities:

☐ Legal name
☐ Principal place of business address
☐ Taxpayer identification number (EIN)
☐ Identification of beneficial owners (25%+)
☐ Identification of control persons

4.4 Suspicious Activity Monitoring

☐ Transaction monitoring procedures established
☐ Red flag indicators documented
☐ Investigation procedures documented
☐ SAR filing procedures established
☐ Escalation procedures documented

4.5 Recordkeeping

☐ CIP records maintained for 5 years after account closed
☐ SAR records maintained for 5 years
☐ CTR records maintained for 5 years
☐ AML training records maintained

4.6 Independent Testing

SECTION 5: CUSTOMER ACCOUNT DOCUMENTATION

5.1 New Account Approval

☐ New Account Form completed
☐ Customer Agreement signed
☐ Risk disclosures provided
☐ Privacy notice provided
☐ CIP verification completed
☐ Supervisory principal approval obtained

5.2 Required Account Information

For Individual Accounts:

☐ Full legal name
☐ Date of birth
☐ Social Security Number
☐ Residential address
☐ Employment information
☐ Investment objectives
☐ Risk tolerance
☐ Time horizon
☐ Annual income
☐ Net worth (liquid and total)
☐ Tax status

For Entity Accounts:

☐ Legal entity name and type
☐ Formation documents
☐ EIN
☐ Beneficial ownership certification
☐ Authorized signatories
☐ Corporate resolution

5.3 Account Maintenance

☐ Customer information updated periodically
☐ Material changes documented
☐ Suitability re-evaluated upon changes
☐ Account reviews conducted per schedule

SECTION 6: SUITABILITY AND KNOW YOUR CUSTOMER

6.1 Suitability Requirements (FINRA Rule 2111)

Three Suitability Obligations:

☐ Reasonable-Basis Suitability - Reasonable diligence to understand product
☐ Customer-Specific Suitability - Suitable for particular customer
☐ Quantitative Suitability - Not excessive given customer profile

6.2 Suitability Determination Factors

☐ Customer's age
☐ Investment experience
☐ Time horizon
☐ Liquidity needs
☐ Risk tolerance
☐ Tax status
☐ Other investments
☐ Financial situation and needs

6.3 Product-Specific Suitability

6.4 Documentation Requirements

☐ Suitability determination documented
☐ Rationale for recommendation documented
☐ Customer acknowledgment obtained where required
☐ Supervisory review completed

SECTION 7: ORDER HANDLING AND BEST EXECUTION

7.1 Best Execution Obligation (FINRA Rule 5310)

☐ Regular and rigorous review of execution quality
☐ Comparison of execution quality across venues
☐ Order routing analysis
☐ Payment for order flow disclosure

7.2 Order Handling Procedures

☐ Orders timestamped upon receipt
☐ Orders executed promptly
☐ Customer instructions followed
☐ Limit orders handled appropriately
☐ Error procedures established

7.3 Trade Confirmation Requirements

☐ Confirmations sent by settlement date
☐ Required information included
☐ Capacity disclosed (principal/agent)
☐ Commission disclosed
☐ Mark-up/mark-down disclosed

7.4 SEC Rule 606 Disclosure

☐ Quarterly order routing report prepared
☐ Report made publicly available
☐ Payment for order flow disclosed

SECTION 8: PRIVATE SECURITIES TRANSACTIONS

8.1 Policy Statement

All associated persons must obtain prior written approval before participating in any private securities transaction (FINRA Rule 3280).

8.2 Approval Process

☐ Written notice submitted to supervisor
☐ Description of transaction provided
☐ Role of associated person described
☐ Compensation disclosed
☐ Supervisory determination made
☐ Approval/denial documented

8.3 Supervision of Approved Transactions

If compensation received:
☐ Transaction recorded on firm's books
☐ Supervisory procedures applied
☐ Customer suitability reviewed
☐ Disclosure to customer made

SECTION 9: OUTSIDE BUSINESS ACTIVITIES

9.1 Policy Statement

All associated persons must provide prior written notice of any outside business activity (FINRA Rule 3270).

9.2 Disclosure Requirements

☐ Written notice submitted
☐ Nature of activity described
☐ Time commitment disclosed
☐ Compensation disclosed
☐ Potential conflicts identified

9.3 Review and Approval

☐ Compliance review conducted
☐ Conflict of interest analysis
☐ Approval/denial/conditions documented
☐ Periodic review conducted

SECTION 10: COMMUNICATIONS WITH THE PUBLIC

10.1 Classification of Communications (FINRA Rule 2210)

10.2 Content Standards

All communications must:

☐ Be fair and balanced
☐ Provide sound basis for evaluating facts
☐ Not omit material information
☐ Not make exaggerated claims
☐ Not predict or project performance
☐ Include required disclosures

10.3 Social Media Policy

☐ Social media policy established
☐ Approved platforms identified
☐ Monitoring procedures established
☐ Recordkeeping procedures established
☐ Training provided

10.4 Recordkeeping

☐ Retail communications retained 3 years
☐ Correspondence retained 3 years
☐ Approval records maintained
☐ Social media records archived

SECTION 11: BOOKS AND RECORDS

11.1 Required Records (SEC Rule 17a-3)

☐ Blotters (purchase/sale, receipts, disbursements)
☐ Ledgers (assets, liabilities, income, expense, capital)
☐ Customer account records
☐ Order tickets/memoranda
☐ Confirmations
☐ Trial balances
☐ Communications
☐ Employment applications
☐ Written agreements
☐ Complaint files

11.2 Record Retention (SEC Rule 17a-4)

11.3 Electronic Recordkeeping

☐ WORM storage compliance (if electronic)
☐ Third-party access arrangements
☐ Index and retrieval capability
☐ Backup procedures established

SECTION 12: NET CAPITAL COMPLIANCE

12.1 Net Capital Requirements (SEC Rule 15c3-1)

Current Firm Requirement: $ [________________________________]

12.2 Net Capital Calculation

☐ Net capital calculated [daily/weekly/monthly]
☐ Haircuts properly calculated
☐ Deductions properly taken
☐ Warning levels established

12.3 Early Warning Notification

☐ Notification required if net capital falls below 120% of minimum
☐ FINRA notification procedures documented
☐ Contingency plans established

SECTION 13: CUSTOMER PROTECTION (RULE 15c3-3)

13.1 Customer Reserve Requirements

☐ Reserve computation prepared [weekly/daily per 2026 requirements]
☐ Special reserve bank account maintained
☐ Customer securities properly safeguarded
☐ Possession or control requirements satisfied

13.2 Segregation Requirements

☐ Fully paid securities segregated
☐ Excess margin securities segregated
☐ Physical location compliance
☐ Good control location identified

SECTION 14: REGULATORY REPORTING

14.1 FOCUS Reports

14.2 Other Required Filings

☐ Form BD amendments (within 30 days of changes)
☐ Form U4/U5 updates (within 30 days)
☐ Rule 17a-5 annual audit
☐ Rule 606 quarterly reports
☐ FINRA Annual Registration Renewal

SECTION 15: CYBERSECURITY AND BUSINESS CONTINUITY

15.1 Cybersecurity Program

☐ Written cybersecurity policy
☐ Risk assessment conducted
☐ Access controls implemented
☐ Encryption for sensitive data
☐ Incident response plan
☐ Employee training
☐ Vendor management procedures

15.2 Business Continuity Plan (FINRA Rule 4370)

☐ Written BCP adopted
☐ BCP summary disclosed to customers
☐ Mission critical systems identified
☐ Backup facilities identified
☐ Communication procedures established
☐ Annual review and testing
☐ Emergency contact person designated

SECTION 16: ANNUAL COMPLIANCE REVIEW

16.1 Annual Compliance Meeting

☐ Annual compliance meeting held
☐ Regulatory developments reviewed
☐ Compliance issues discussed
☐ Training needs identified
☐ Meeting documented

16.2 Annual Written Report (FINRA Rule 3120)

☐ Report on supervisory controls prepared
☐ Testing results summarized
☐ Deficiencies identified
☐ Remediation documented
☐ Report reviewed by senior management
☐ Report signed by CCO

16.3 Annual Certification

I certify that:

1. This compliance manual has been reviewed and updated
2. All supervisory procedures are reasonably designed to achieve compliance
3. All required testing has been conducted
4. All deficiencies have been identified and remediation is in progress or completed

______________________________________
Chief Compliance Officer Signature

[________________________________]
Name (Print)

Date: [__/__/____]

______________________________________
Chief Executive Officer Signature

[________________________________]
Name (Print)

Date: [__/__/____]

APPENDICES

Appendix A: Supervisory Organization Chart

Appendix B: Branch Office List

Appendix C: Approved Product List

Appendix D: Exception Reports and Review Schedule

Appendix E: Compliance Calendar

Appendix F: Forms and Disclosures

Appendix G: Training Schedule

Appendix H: Regulatory Contact Information

SOURCES AND REFERENCES

• FINRA Manual: https://www.finra.org/rules-guidance/rulebooks
• FINRA WSP Checklist: https://www.finra.org/registration-exams-ce/broker-dealers/new-member-application-guide/preparing-wsp
• SEC Broker-Dealer Rules: https://www.sec.gov/rules-regulations/staff-guidance/broker-dealer-rules
• FINRA 2026 Annual Regulatory Oversight Report: https://www.finra.org/rules-guidance/guidance/reports/2026-annual-regulatory-oversight-report

This template is provided for informational purposes only and does not constitute legal advice. Broker-dealer compliance requirements are complex and subject to frequent change. Consult with qualified securities counsel and compliance professionals.