ESI Written Supervisory Procedures Update
Summary of changes
| # | Title | Update |
| 2.3 | Outside Business Activities | Added a prohibition for selling or soliciting digital assets (including but not limited to cryptocurrencies, digital tokens, digital currencies, virtual assets, and initial coin offerings, and digital asset consulting/education services). |
| 3.2.11 | Maintaining Terminated Persons’ Registration | Added to reflect FINRA allowing individuals who terminate their registration to maintain their qualifications for five years following termination under certain conditions per amendments made to FINRA Rule 1240. |
| 5.2.2.1 | Doing Business As (DBAs) Names | Added clarification around DBAs. RRs may not use DBA names on customer communications except when: Clear and prominent identification of the Firm as the entity through which securities are offeredDBA name has been reviewed and approved by AGT and Compliance and required disclosures are madeClear explanation of the DBA and its relationship with the FirmCommunications are subject to review including content and disclosuresDBAs for insurance activities may not imply that securities, advisory services or financial planning services are offered through the DBA entity. |
| 5.12 | Electronic Communications Policy | Section 2.18 has been removed and combined with Section 5.12: Electronic Communication Policy so that the policies and the procedures are together in the same section. |
| 9.7 | Anti-Money Laundering | Section 2.15 has been removed and combined with Section 9.7: Anti-Money Laundering so that the policies and the procedures are together in the same section. |
| 10.8.7 | Financial Exploitation – Temporary Holds | Added an additional 30 days that a temporary hold may be placed when there is a reasonable belief of financial exploitation per amendments made to FINRA Rule 2165. |
| 19.3.1 | Correspondence | Added that municipal securities correspondence require review by a municipal securities principal. If a municipal securities supervisor is not available in the field office, the correspondence must be submitted ESI. A home office municipal securities principal will review and return to be retained in the Correspondence File. This was previously communicated under Field Notice 2019-06. |
Location of manual
Please review the updated ESI’s Written Supervisory Procedures for details of the changes outlined in this notice. The manual may also be found on the NLG Website, under “Compliance” à “ESI Compliance” à “Overview” à “ESI Written Supervisory Procedures”.
QUESTIONS
If you have any questions regarding this notice, please feel free to contact ESI Compliance at 800-344-7437.
EFA Written Supervisory Procedures Update
ESI Financial Advisors (“EFA”) continually reviews its Written Supervisory Procedures (“WSP”) in accordance with the regulatory and business requirements. Effective June 30, 2022, ESI’s WSP manual has been updated to incorporate various changes. Among others, the substantive changes are summarized below.
Summary of changes
| # | Title | Update |
| 19.5 | Investment Adviser Representative Continuing Education | Added the requirement for IARs to complete continuing education annually in certain states. For more details, please review Field Notice 2022-08. |
| 19.6 | Outside Business Activities | Added a prohibition for selling or soliciting digital assets (including but not limited to cryptocurrencies, digital tokens, digital currencies, virtual assets, and initial coin offerings, and digital asset consulting/ education services). |
| 19.7 | Borrowing From And Lending To Customers | Added details to the prohibition of IARs borrowing from or lending to customers to align with the ESI WSPs. |
| 23.6 | Accounts for Marijuana-Related Businesses and Associated Individuals | Added that the Firm does not allow opening accounts for marijuana businesses or customer who derive their income from marijuana businesses to align with the ESI WSPs. |
| 37.4.3.2 | Temporary Holds | Added an additional 30 days that a temporary hold may be placed when there is a reasonable belief of financial exploitation to align with the ESI WSPs. |
Location of manual
Please review the updated EFA’s Written Supervisory Procedures for details of the changes outlined in this notice. The manual may also be found on the NLG Website, under “Compliance” à “ESI Compliance” à “Overview” à “EFA Written Supervisory Procedures”.
QUESTIONS
If you have any questions regarding this notice, please feel free to contact ESI Compliance at 800-344-7437.
TC128009(0822)1