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A Mid-Sized General Securities Sales Organization
(Prepared for 1996)
Continuing Education Program For Registered Representatives July 1, 1995 This Firm's continuing education program contains deficiencies that outweigh the strengths of the plan. The significant overall deficiency in this plan is the absence of an analytical context in which all the training activity can be understood. To comply with the Firm Element requirements, the needs analysis and its translation into a training plan need more thought. There is, for example, no discussion of the aggregate results or the specific input of management and compliance personnel into the analysis. Many other factors are left unaddressed, such as a review of the Firm's customer complaint and arbitration experience, the results of regulatory reviews, and changes in the regulatory environment that may affect the Firm. For this document to communicate the efforts put forth by the Firm to analyze its training needs, it must be significantly expanded. The Firm must not limit its Firm Element training to registered representatives (page 2.3, "Firm Element"). SRO rules stipulate that the supervisors of those registered representatives who deal with the public must also be included. While the "Program of Instruction" (pages 2.3 to 2.4) contains material that would appear to be applicable to registered representatives dealing with the public, there is no way in this report to relate it to the analysis of training needs performed by the Firm. In fact, the analysis itself could not possibly provide a basis for the proposed course of study. Also note that although the plan references "NASD-approved" vendors of training material (page 2.5), neither the NASD, the NYSE, nor any other SRO approves any vendors that provide training to firms, nor do they plan to do so. One strength in the plan is the use of an individual continuing education file (page 2.3) for each covered person. This is a commendable practice that makes it easier to monitor each person's compliance with the Firm Element. Another strength is the program tracking system (page 2.5), which appears operationally practical for this Firm. The questionnaire (pages 2.6 to 2.7), which is completed by registered representatives at the firm, also appears useful. (For additional comments on surveys, see Council Comments on page 7.4.) GENERAL OVERVIEW The Firm was established in [Year]. The Firm manages the investments of high net worth individuals providing full service brokerage and asset management to approximately 5,000 retail and institutional clients. The firm has no investment banking operations and does not make markets nor take positions in securities. There are one hundred and four registered representatives at the firm. In general, the brokers are very experienced and have excellent knowledge in the subjects that they deal with, as well as good relationships with their customers. In preparing to comply with the requirements of the SROs on continuing education, the Firm prepared a needs analysis that was completed by every registered representative and senior management personnel. This needs analysis was used to identify specific needs of the RRs and to give management a better idea of firm wide areas of interest and needs for continuing education. The results of the needs analysis are indicated on the individual representative's needs sheet as well as the firm summary sheet. Each registered representative will receive a continuing education file to retain all education material distributed, the RR transcript of subjects and date of completion, a self-study manual and computer disks. This file will be reviewed with each RR on a periodic basis for assessing progress and completion of each part of the continuing education program. The firm will maintain a tracking schedule for each RR indicating educational training and date of completion. FIRM ELEMENT The Firm Element will be the responsibility of, and be supervised by, the Compliance Director and the Firm's Office Manager. All Registered Representatives of the firm will participate in the Firm Element of the program and all will be required, in the first year of the continuing education program, to participate in a uniform and standard education program. However, those RRs that do not have public customers will not be required to participate in the Investment/ Research Meetings segment of the program. They may attend on a voluntary basis. This will be required only for those RRs with public customers. A list of all RRs is included. The continuing education program that the Firm will present is based on the RR needs analysis survey, senior management discussions, and compliance department discussions with senior management. NEEDS ANALYSIS DOCUMENT, SUMMARY AND PROGRAM The needs analysis (immediately following) was developed to determine what subjects the brokers, management, and compliance officers felt that the RRs needed training in. Every registered representative filled out the basic questionnaire and additional information was taken from management and compliance officers. A compilation of results from the questionnaire resulted in twelve topics we felt it would be prudent to teach in our continuing education program. We have divided the continuing education program into three components as follows with the subject matter for each component indicated: PROGRAM OF INSTRUCTION I. Compliance * Suitability * Registration * Insider Trading * Buying in Own Account * Other Compliance Issues as directed by Compliance Officer/Senior Management II. Investment Strategies: (Products/Services) * Retirement Planning - IRA * Investment Strategies * Estate Planning * Municipal Bonds * Fixed Income * Mutual Funds * Tax Impact and Rules on Investing III. Client Relations * Written Materials Available on Rules & Regulations * Conduct of Accounts * Changing Investment Objectives of Clients * Other Issues as Directed by Compliance Officer/Senior Management These above listed subjects to be presented in the continuing education program will be reviewed during the year and may be changed or subjects added based on industry regulatory rule changes, new products offered by the firm or an expressed request to offer a topic by the RRs or the management of the Firm. FIRM ELEMENT PROGRAM PRESENTATION The Firm has elected to present its continuing education program utilizing: (1) Live Presentations/Classroom Instruction; (2) A self-paced Registered Representative Manual; (3) Videotaped Presentation; and (4) Computer Based Training (CBT). Part I Live Presentation/Classroom Instruction The Firm holds weekly meetings for all registered representatives. At these Investment/ Research meetings, the agenda encompasses continuing education topics. The Firm maintains notes and documents the topics discussed at these meetings as well as attendance records. In addition, on a quarterly basis, the compliance officer or other senior officers will conduct lectures on specific topics that were indicated by registered representatives as topics for continuing education and other compliance matters that management believes should be presented. These quarterly meetings will also include guest speakers and video presentations on selected subjects that are appropriate in conducting business with clients. For example, a guest speaker on taxes is scheduled for December 1995; this is an appropriate time for this topic and other speakers will be scheduled as required. The schedule of meetings and topics are as follows: * Weekly RR Investment Meetings each Tuesday at 9:00 a.m. * Tax Presentation: December [ ], 1995. * Quarterly Compliance Meetings - Dates 1996 - To Be Announced. Part II Self-Paced Study Program - Continuing Education Manual The second aspect of the firm continuing education program will be the distribution of the Registered Representative Compliance Overview Manual. This printed manual covers the following subjects : * Suitability * Communications with the public * Customer complaints * Prohibited investment practices * Mutual fund compliance * Initial public offering compliance * Purchase and sales of hot new issues * Fair prices and commissions * Blue Sky Laws * Gifts and gratuities * Written notification requirements * Insider trading Tutorial tests will be utilized in self-study segments of the program. Part III Videotaped Presentation The third aspect of our training will be a video- tape. This tape will be shown as part of the Firm's June Compliance Meeting Program. This tape covers the following topics: * Suitability/Recommendation * Communications with the public * Customer complaints * Prohibited investment practices * Mutual fund compliance * IPO compliance * Hot new issues * Blue Sky Laws * Gifts and gratuities * Written notification requirements Videotapes will also be presented on the firm's investment products, such as mutual funds and options. Dates and times of videotape presentations to be announced. Part IV Computer Based Training (CBT) Computer based training on those subjects listed in the continuing education program will be provided to the registered representative in the third quarter 1996. (Videotape/Live Presentation - Self-Study will be presented before CBT.) The CBT training disks and subjects will be obtained from an NASD-approved vendor in the Continuing Education Program. Dates and times of the CBT disks to be announced as disks are made available on the network (LAN). Part V Checklist and Tracking Form All registered representatives will be required to keep a tracking form indicating [Firm's] requirements for completing the SRO requirements for continuing education. Management will also maintain a copy of each RR's activities to insure that requirements are being met. It will be the responsibility of the compliance director, [Name], to maintain the tracking records. The training materials, documentation of meetings, content of live presentations, course content, attendance lists, and tracking documents used in the continuing education program are required and will be kept on file and will be made available for review or examination by management, the firm's auditors, and regulatory examiners. Firm Element Exhibit Continuing Education Checklist
Continuing Education Needs Analysis Registered Representative Questionnaire To: Registered Representatives From: Compliance Department Please answer the following questions - attaching additional sheets if necessary. 1. In which areas of your business do you feel you need the most educational Support? Insider Trading/prohibited investment practices New and secondary offering Rules; registration and licensing practices Mutual Fund compliance Communication with clients Dealing with hot issues Handling customer accounts Fees and commissions Role of Analyst vs. Broker Trading and settlement 2. Which are the most common misunderstandings you encounter with your clients? Brokers' obligations Suitability of investment strategies Account positions Unauthorized transactions Brokers' rights T + 3, T + 5 Prices, Fees Other 3. What assistance do you need to be more effective in communicating with clients? Counseling on different investment opportunities More written materials on rules and regulations Counseling on different investment strategies Information on retirement plans 4. What ethical contradictions or questions do you feel Registered Representatives face in the conduct of their business? Placing one customer ahead of another Dealing with insider information Buying in own account 5. As applicable, please rank (1 low - 10 high) the below listed products/services/skills according to their importance to you, and your understanding of them:
6. What techniques do you favor for continuing education? Correspondence course/written material Computer based training Videotapes Lectures I have filled out this report understanding it will be used to develop the Firm's Needs Analysis for Continuing Education to comply with regulations. Name Date |
