FINRA Rule 3120: Supervisory Control System

FINRA Rule 3120(a) requires firms to designate and identify to FINRA one or more principals required to create, maintain, and enforce supervisory control procedures and policies. The policies and procedures must:
(1) Test and verify that the firm’s supervisory procedures are reasonably designed so the firm and its associated persons’ activities are compliant with applicable securities laws, regulations, and FINRA rules, and
(2) Where necessary, create additional or amended supervisory procedures.

The principals must annually prepare and submit a report summarizing the test results and any necessary procedure amendments to the firm’s senior management.

FINRA Rule 3120(b) requires a firm, who reported gross revenues of $200 million or more on its FOCUS report in the previous calendar year, to include as applicable to the firm’s business a:
(1) Tabulation of the reports pertaining to customer complaints and internal investigations made to FINRA during the preceding year; and
(2) A discussion of the preceding year’s compliance efforts, including procedures and educational programs, in each of the following areas:
(3) Trading and market activities;
(4) Investment banking activities;
(5) Antifraud and sales practices;
(6) Finance and operations;
(7) Supervision; and
(8) Anti-money laundering.

Link to Rule: http://finra.complinet.com/en/display/display_main.html?rbid=2403&element_id=11345
Helpful Link: http://finra.complinet.com/en/display/display.html?rbid=2403&element_id=11470