Cal. Code Regs. Tit. 10, § 260.218.4 - Supervision of Agents

Current through Register 2022 Notice Reg. No. 16, April 25, 2022

(a) Every broker-dealer shall exercise diligent supervision over the securities activities of all of its agents.
(b) Every agent employed by a broker-dealer shall be subject to the supervision of a supervisor designated by such broker-dealer. The supervisor may be the broker-dealer in the case of a sole proprietor, or a partner, officer, office manager, or any qualified agent.
(c) As part of the responsibility under this rule, every broker-dealer shall establish, maintain and enforce written procedures, a copy of which shall be kept in each business office, which shall set forth the procedures adopted by the broker-dealer to comply with the following duties imposed by this section, and shall state at which business office or offices the broker-dealer keeps and maintains the records required by Section 260.218.5 of these rules.
(1) The review and written approval by the designated supervisor of the opening of each new customer account;
(2) The frequent examination of all customer accounts to detect and prevent irregularities or abuses;
(3) The prompt review and written approval by the designated supervisor of all securities transactions by agents and all correspondence pertaining to the solicitation or execution of all securities transactions by agents;
(4) The review and written approval by the designated supervisor of the delegation by any customer of discretionary authority with respect to the account to the broker-dealer or to a stated agent or agents of the broker-dealer and the prompt written approval of each discretionary order entered on behalf of that account; and
(5) The prompt review and written approval of the handling of all customer complaints.
(d) Every broker-dealer who has designated more than one supervisor pursuant to Subsection (b) of this section shall designate from among its partners, officers or other qualified agents, a person or group of persons who shall:
(1) supervise and periodically review the activities of the supervisors designated pursuant to subsection (b) of this section; and
(2) periodically inspect each business office of the broker-dealer to insure that the written procedures are enforced.

Notes

Cal. Code Regs. Tit. 10, § 260.218.4

Note: Authority cited: Sections 25218 and 25610, Corporations Code. Reference: Section 25218, Corporations Code.

1. Amendment filed 11-29-79 as an emergency; designated effective 1-1-80. Certificate of Compliance included (Register 79, No. 80).
2. Editorial correction of subsection (c) filed 11-9-82 (Register 82, No. 46).
3. Amendment of subsection (d) filed 1-7-88; operative 2-6-8 (Register 88, No. 4).

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