Annual Compliance Meeting

Ainsley Securities is building its supervisory calendar for the coming year. Under FINRA Rule 3110, what must the firm do at least once each year with respect to every registered representative?

1. A.Require every registered representative to re-take the qualification examination for the registration held.There is no annual requalification examination.
2. B.File an amended Form U4 for each representative whether or not anything has changed.Form U4 is amended when information changes, not on an annual cycle.
3. C.Hold an interview or meeting with each registered representative at which compliance matters relevant to that person activities are discussed.This is the annual compliance meeting required by Rule 3110.
4. D.Conduct an unannounced inspection of each representative home.Inspection obligations attach to offices and locations under a risk-based schedule, not to every home annually.

Why: Rule 3110 requires each registered person to attend an interview or meeting, at least annually, at which compliance matters relevant to that person activities are discussed. It is usually called the annual compliance meeting and it may be held individually or in groups.

Northgate Securities requires only registered representatives who generated commission revenue in the prior year to attend its annual compliance meeting; support staff and non-producing registered principals are excused. Does this satisfy FINRA Rule 3110(a)(7)?

1. A.No, because only representatives who handle customer funds must attend.Wrong. This misstates the rule's population by substituting a funds-handling test for the actual requirement, which covers registered persons generally.
2. B.No, because the obligation extends to all registered persons, not only revenue producers.Correct. Rule 3110(a)(7) covers registered persons generally; excusing non-producers still leaves registered individuals without the required annual review.
3. C.Yes, because only producing representatives interact with customers.Wrong. Customer contact is not the test in the rule; registration status is, and non-producing registered principals remain registered persons.
4. D.Yes, provided the excused staff certify they reviewed written compliance materials instead.Wrong. The rule ties the obligation to a meeting or interview; a written certification in lieu of attendance does not satisfy that requirement.

Why: Rule 3110(a)(7) requires member firms to conduct, at least annually, a meeting or interview at which compliance matters relevant to the activities of registered persons are discussed. The obligation runs to registered persons generally, not to a revenue-based subset of producers. Excusing non-producing registered staff leaves those individuals without the required annual review even though they remain registered and subject to the firm's supervisory system. The firm must extend the meeting to its full population of registered persons.