FINRA Extends Parking Period from Two Years to Five Years

Registered Representatives with a broker-dealer presently have two years from their date of leaving a firm to re-register with another firm. Otherwise their qualifications, and especially their passed examinations, would lapse. Reps would sometimes try to “park” their registration at a firm to avoid having to re-take examinations. Nobody wants to re-take those exams.

FINRA just allowed for a five year gap between firms, as long as the rep takes continuing education. Effective as of March 2022, FINRA amended Rules 1210 and 1240 to create a new Maintaining Qualifications Program (MQP). That gives a rep five years to find that new firm or to explore a new opportunity before losing qualification and having to re-take exams. During those five years, the rep will have to take a new set of continuing education requirements each year during the gap between firms.

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How NOT to Run a Safety Drill

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Running drills is important. Experience with adverse circumstances is important so that you and your co-workers know what to do if there is a problem. Drills are especially important for dangerous circumstances.

There is a reason that building managers, schools and other institutions run fire drills. If there is an actual fire, you will know where to go and what to do. Of course, when you run a fire drill, you don’t light an actual fire and don’t fill the hallways with smoke.

I’m not sure what Hampton Behavioral Health Center was thinking when they decided to have an unannounced safety drill. They sent in a masked gunman to demand Oxycontin from a pharmacist’s assistant. The “gunman” told her he was holding Hampton’s human resources director hostage and the phone lines were dead.

It also sounds like the drill was for situation that the employee was not trained on how to handle. In her lawsuit, she is seeking damages for assault, false imprisonment and intentional infliction of emotional distress.

September is National Preparedness Month: Ready.gov. It’s good to plan for an emergency situation, train your employees and run drills. But be sensible about it and don’t scare the crap out of them.

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Image is by Domingouceda: 1. http://www.flickr.com/photos/domingouceda/ / CC BY 2.0

Bob Schiller’s Course on Financial Markets at Yale

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Yale University has published the lectures from its Economics 252 course on YouTube. There are 26 lectures from Robert Schiller and some of his guests during the Spring of 2008. (Yes, that Robert Schiller.) This ECON 252 course is one of several courses available from Open Yale. These are selected lectures and other materials from selected Yale College courses that they make available to the public free of charge through the internet.

If you want to be effective at compliance, you need to understand how the financial markets work. These videos provide some great information, background, and theory on the financial markets.  (If only they were podcasts so I could watch and listed during the commute.)

ECON 252 Course Summary: Financial institutions are a pillar of civilized society, supporting people in their productive ventures and managing the economic risks they take on. The workings of these institutions are important to comprehend if we are to predict their actions today and their evolution in the coming information age. The course strives to offer understanding of the theory of finance and its relation to the history, strengths and imperfections of such institutions as banking, insurance, securities, futures, and other derivatives markets, and the future of these institutions over the next century.

Each of the 26 seminars is 75 minutes. Here are the individual seminars.

1. Finance and Insurance as Powerful Forces in Our Economy and Society

2. The Universal Principle of Risk Management: Pooling and the Hedging of Risks

3. Technology and Invention in Finance

4. Portfolio Diversification and Supporting Financial Institutions

5. Insurance: The Archetypal Risk Management Institution

6. Efficient Markets vs. Excess Volatility

7. Behavioral Finance: The Role of Psychology

8. Human Foibles, Fraud, Manipulation, and Regulation

9. Guest Lecture by David Swensen

10. Debt Markets: Term Structure

11. Stocks

12. Real Estate Finance and its Vulnerability to Crisis

13. Banking: Successes and Failures

14. Guest Lecture by Andrew Redleaf

15. Guest Lecture by Carl Icahn

16. The Evolution and Perfection of Monetary Policy

17. Investment Banking and Secondary Markets

18. Professional Money Managers and Their Influence

19. Brokerage, ECNs, etc.

20. Guest Lecture by Stephen Schwarzman

21. Forwards and Futures

22. Stock Index, Oil and Other Futures Markets

23. Options Markets

24. Making It Work for Real People: The Democratization of Finance

25. Learning from and Responding to Financial Crisis I (Lawrence Summers)

26. Learning from and Responding to Financial Crisis II (Lawrence Summers)

Compliance & Ethics Institute Announces Las Vegas Lineup

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The Society of Corporate Compliance & Ethics has released the schedule of programs for its Compliance & Ethics Institute to be held September 13-16 in Las Vegas: Preliminary Brochure (.pdf) I am not sure if I am going to head out to Las Vegas for this particular conference, but there are some very interesting topics on the agenda.

These are a few sessions that caught my attention:

  • 102: Facebook, LinkedIn, YouTube–Friend or Foe? How Social Networks and Web 2.0 Are Creating Risks for Companies
    Orrie Dinstein, Chief Privacy Leader, GE Capital
  • 103: Risk Management Culture: The Linkage Between Ethics & Compliance and ERM
    Barbara Kipp, Partner, PricewaterhouseCoopers
  • 303: Compliance at Siemens: A Management Change Process
    Dr. Klaus Moosmayer, Compliance Operating Officer and Chief Counsel Compliance & Investigations, Corporate Legal and Compliance, Siemens AG
  • 403: Key Recent Developments Regarding Attorney-Client Privilege, Work Product Protection, and Indemnification
    Frank Sheeder, CCEP, Partner, Jones Day
  • 505: The Post-Bailout Regulatory Scene: Implications for Your Compliance & Ethics Program
    Matt Kelly, Editor in Chief, Compliance Week
  • 604: The Ethics Gap: How Our View of Business Ethics has Gotten Out of Step with the Public’s and What We Need to Do About It
    Ed Petry, PhD, Vice President, Ethical Leadership Group, A Global Compliance Company

Let’s Get Ethical!, Ethical!, I Want To Get Ethical…

Those of you that watch NBC’s “The Office” see some of the best examples of what NOT to do in business every week. They also tackled what not NOT to do in an Ethics Training course. The clip shows some of the worst training skills (reading from the binder, HR-speak, etc.).

It also provides an unusual example of a compliance problem, with Meredith sleeping with a supplier in exchange for a discount.

Unfortunately, the ethical lapses are not limited to the rag-tag Scranton office, but also exist in the main office. The response to Meredith’s confession from the home office?: “I’m not sure that these circumstances warrant any action…this seems like a grey area.”

Thinking About Training

Jeffrey M. Kaplan and Rebecca Walker, partners in the law firm of Kaplan & Walker LLP wrote an article Thinking About Training in the March/April 2008 edition of Ethikos.

The goals of training—to enhance employees’ understanding of the law and company policy and promote ethical business conduct—will not be achieved if training is not comprehensible and interesting enough to be heard and remembered. The Sentencing Guidelines highlight this notion by providing that companies must not only provide training—they must do so in an effective manner.

Compliance and Ethics Training – How Much is Enough

In this podcast panel discussion, OCEG’s Carole Switzer moderates a discussion with ELT’s Shanti Atkins and SAI Global’s Mark Rowe to answer the question of how much is enough when it comes to compliance and ethics training. You can listen to a webcast and read a transcript (.pdf).

Ms. Atkins talks about a three layers of training. The first layer is training that is legally mandatory. One example is sexual harrassment training in some states. The second layer is training related to mandatory guidelines. You are not in violation of law for failing to do the training, but in the event of a problem the failure to have training results in elevated fines, penalties or damages. One example is the federal sentencing guidelines. The third layer is training as a best practice for the organization giving its risk profile.

Ms. Atkins sees extremes between lengthy training sessions that happens at regular intervals, but is not reactive to the company’s needs and is repetitive.  At the other extreme is companies doing the bare minimum.

Ms. Switzer tries to draw a line between generational differences in the workplace at training. Ms. Atkins de-bunks this approach. (In my prior career in Knowledge Management I also did not see generational differences in training. There is just good training and bad training. I see some generational differences in tolerance for bad training.) Mr. Rowe has found story-based training to be more effective. You need to engage them in the training and not just talk at them.

Ms. Atkins sees some problems with scoring learners and keeping track of a database of scores as employees go through the training. One is how you go about following-up and addressing sub-par performers. The second is the potential for that information to be used against the company in a lawsuit.

Handing out a code of conduct and get a signed acknowledgment that an employee read it, is not training. Mr. Rowe emphasized the need to put the information into context, into a real-life situation. He also likes the idea of setting a bar that learners need to prove they understand one topic before they move onto another topic.

Ms. Atkins emphasized the need to keep the training modular so that scenarios can be added and removed and the training can be updated.

Mr. Rowe points out that “ethics training isn’t just a list of rules; it’s guidance that should help people perform their jobs in a better way and reduce risk to the organization.”