SEC Approves New Compliance Rule to Protect Investors

The NASD is concerned with the "regulatory challenges" facing brokerage firms, and new Rule 3013 is viewed as "an important step in building this necessary culture of compliance." The SEC has approved the rule.

Brokerage firms will be required, under the new rule, to designate a chief compliance officer. Further, the chief executive officer will be required to annually certify that the firm has in place processes to establish, maintain, review, test and modify written supervisory procedures. The firm's board of directors and audit committee must receive a report detailing those processes. Finally, the CEO must certify that he or she has met with the CCO at least once per year.

Source: NASD Press Release, September 23, 2004