Rule 590-4-5-.12 - Supervisory Requirements(1) Every broker-dealer registered, or required to be registered, under the Act shall exercise diligent supervision over the activities of its agents and associated persons. (a) Each agent and other associated person shall be subject to the supervision of a designated supervisor.(b) Written procedures, a copy of which shall be kept or capable of being accessed in each Office of Supervisory Jurisdiction ("OSJ"), shall be established, maintained and enforced, and shall set forth the standards and procedures adopted to comply with the requirements imposed by the Act and the Rules, including, but not limited to, the following: 1. Administrative review and written approval of all new customer accounts;2. Periodic examination of customer accounts to detect and prevent irregularities or abuses;3. Prompt administrative review of all customer complaints and arbitrations;4. Prompt administrative review of correspondence pertaining to the solicitation and execution of securities transactions; and5. The review by the designated supervisor, and his or her written approval, of the delegation by any customer of discretionary authority with respect to his or her account, and the frequent, periodic examination of all such discretionary accounts to prevent irregularities or abuses.(c) Each registered agent, individually or collectively, shall participate, not less than annually, in an interview or meeting conducted by persons designated by the broker-dealer at which compliance matters relevant to the activities of the agent(s) are discussed. Such interview or meeting may occur in conjunction with the discussion of other matters and may be conducted at a central or regional location or at the agent's place of business.(d) Each broker-dealer shall conduct a review, at least annually, of the businesses in which it and its registered agents engage that shall be reasonably designed to assist in detecting and preventing violations of, and achieving compliance with, the Act and the Rules. Each broker-dealer shall review the activities of each of its offices, including periodic examinations of customer accounts to detect and prevent irregularities or abuses, and each broker-dealer shall conduct at least an annual inspection of each OSJ. Each branch office of the broker-dealer shall be inspected according to a cycle that shall be set forth in the broker-dealer's written supervisory and inspection procedures. In establishing such a cycle, the broker-dealer shall give consideration to the nature and complexity of the securities activities for which the location is responsible, the volume of business done and the number of associated persons assigned to the location. Each broker-dealer shall retain a written record of the dates upon which each review and inspection is conducted.(e) It shall be the responsibility of each broker-dealer and supervisor to ascertain that all agents are properly registered, as required by the Act and the Rules, prior to making offers or sales of securities.(f) It shall be the responsibility of each broker-dealer and their supervisors to ensure that all associated persons of such broker-dealer are properly trained regarding the disclosure requirements and the civil and criminal liability provisions of the Act.(g) It shall be the responsibility of each broker-dealer and their supervisors to approve all outside investment and securities business activities of each agent prior to the agent engaging in such activity.(2) It shall be the responsibility of each broker-dealer to ensure that all broker-dealer and agent disciplinary data required by the Act and these Rules is promptly and accurately reported in accordance with the requirements of the CRD, or as the Commissioner may designate for broker-dealers that are not registered with the SEC, are not members of FINRA or are not members of any national securities exchange registered with the SEC.(3) Every issuer who employs any broker-dealer or agent in connection with the sale of securities shall comply with the supervision requirements as set forth in the Act and these Rules.Ga. Comp. R. & Regs. R. 590-4-5-.12
O.C.G.A. Secs. 10-5-31, 10-5-35, 10-5-70, 10-5-74.
Original Rule entitled "Supervisory Requirements" adopted. F. Nov. 18, 2011; eff. Dec. 8, 2011.