Supervision of Associated Persons
(1)Every broker-dealer shall exercise diligent supervision over the securities activities of all of his associated persons.
(2)Every associated person of the 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 other qualified associated person.
(3)As part of his 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 rule, and shall state at which business office or offices the broker-dealer keeps and maintains the records required by OAR 441-195-0010 (Customer and Account Records by Broker-Dealers):
(a)The review and written approval by the designated supervisor of the opening of each new customer account;
(b)The frequent examination of all customer accounts to detect and prevent irregularities or abuses, including a review for churning and switching of securities in customers’ accounts, as well as unsuitable recommendations and sales of unregistered securities;
(c)The prompt review and written approval by the designated supervisor of all securities transactions by associated persons and all correspondence pertaining to the solicitation or execution of all securities transactions by associated persons;
(d)The review of back office operations, i.e., all systems and procedures, including the currency and accuracy of books and records, the status and causes of “Fails to Receive” and “Fails to Deliver,” net capital, credit extensions and financial reports;
(e)The review of form, content, and filing of all correspondence related in any way to the purchase or sale or solicitation for the purchase or sale of securities;
(f)The review and written approval by the designated supervisor of the delegation by any customer of discretionary authority with respect to his account to a stated associated person or persons of the broker-dealer and the prompt written approval of each discretionary order entered on behalf of that account; and
(g)The prompt review and written approval of the handling of all customer complaints. As used in these rules, a “Complaint” is considered to be any written statement by a customer, or by any person acting for a customer, which complains about the activities of the broker-dealer or any associated person in connection with the solicitation or execution of a transaction or the disposition of funds of that customer.
(4)Every broker-dealer who has designated more than one supervisor pursuant to section (2) of this rule shall designate from among his partners, officers, or other qualified associated persons, a person or group of persons who shall periodically inspect each business office of the broker-dealer to insure that the written procedures are enforced.
Rule 441-205-0210 — Supervision of Associated Persons,