N.M. Code R. § 12.11.2.24

Current through Register Vol. 35, No. 11, June 11, 2024

Section 12.11.2.24 - BRANCH OFFICE SUPERVISORY REQUIREMENTS

Every registered broker-dealer must employ at its principal office and at each branch office in this state at least one person designated to act in a supervisory capacity who is registered as an agent in this state and has satisfied the supervisory examination requirement in 12.11.2.12 NMAC. Designated supervisors must meet the requirements of this section at the time that the principal or branch office located in this state opens for business. Except as provided in Subsection A of 12.11.2.24 NMAC, the designated supervisor must be physically located in the office that he or she supervises. After a principal or branch office located in this state opens for business, if the designated supervisor no longer meets the requirements of this section, the broker-dealer shall have 90 days from the first date of noncompliance to meet the requirements of this section, provided that the broker-dealer notifies the director in writing of the event of noncompliance within five days of such event and further sets forth the method of supervision pending the replacement of the designated supervisor.

A. For single agent branch offices, the supervisory requirement of this section shall be satisfied if at least one person registered in this state who meets the examination requirements of sections 12.11.2.10 NMAC and 12.11.2.12 NMAC is employed on a full-time basis by the broker-dealer, and the broker-dealer shall:

(1) meet the supervisory requirements of FINRA;

(2) conduct annual on-site field audits, by its compliance department, of each single agent branch office, including, but not limited to, an examination for compliance with books and records requirements, for evidence of outside business activity, and for evidence that such activity was properly disclosed to and approved by the firm;

(3) maintain in its principal office the results of all field audits conducted pursuant to Paragraph (2) of this subsection;

(4) contact annually either telephonically or in writing a random sampling of at least 10 percent of the clients of each agent operating from single agent branch offices to determine if such agents are complying with 12.11.4.16 NMAC, including, but not limited to, whether agents are conducting any business with clients other than business that has been disclosed to the broker-dealer; if clients are contacted telephonically the broker-dealer shall maintain a written memorandum summarizing the questions asked and the clients' responses; and

(5) comply with any additional conditions that the director may by order impose, if the director finds the issuance of such order is necessary or appropriate in the public interest or for the protection of investors.

B. Branch office sales supervisors who have no supervisory or compliance responsibility for net capital or investment banking functions may substitute the general securities sales supervisor examination (series 8 or series 9/10) for the general securities principal exam (series 24).

N.M. Code R. § 12.11.2.24

12.11.2.24 NMAC - Rp, 12.11.2.24 NMAC, 1-1-2010