Common Compliance Mistakes Broker-Dealers Make—and How to Avoid Them

Regulatory pressure is high, exams move fast, and many findings stem from avoidable gaps. The real question: Is your compliance program resilient—or is it relying on hope?

Weak Supervision = The Root of Most Breakdowns

A supervisory system that exists “on paper only” is one of the most common broker-dealer compliance mistakes. Issues arise when procedures aren’t aligned to actual business lines, products, or distribution models—and when documentation of reviews is inconsistent.

Example: A desk in Chicago, IL expands into alternatives, but supervisory controls never evolve. Risk increases. Controls stay outdated. Findings follow.

Blind Spots in Communication Channels

Phones and messaging apps drive modern business—and regulators know it. Firms get cited when they fail to capture, retain, and supervise texts, WhatsApp, and social media—core elements of SEC and FINRA recordkeeping compliance.

Imagine: A sales team in Miami, FL discussing orders over personal apps. Those conversations become invisible to surveillance—and indefensible during exams. This remains one of the biggest broker-dealer compliance challenges.

Cybersecurity & Regulation S-P Gaps

Cybersecurity is not an IT problem—it’s a compliance problem. Weak access controls, untested incident-response plans, and outdated vendor reviews can expose customer data.

Scenario: A phishing attack at a New York firm compromises customer information because incident response wasn’t practiced and safeguards were insufficient.

AML Programs That Aren’t Risk-Based

AML issues surface when programs rely on templates instead of real-world risk. Red flags include shallow CDD, delayed SAR filings, and weak independent testing—issues that escalate quickly in FINRA exams.

How Broker-Dealers Can Avoid Costly Mistakes

Move from reactive fixes to a durable, risk-aligned compliance framework:

• Conduct holistic risk assessments: Map risks by product, client type, geography, and channel.
• Deliver role-specific training: Short, scenario-based refreshers beat generic slide decks.
• Strengthen communications governance: Approved tools lists, automated capture, lexicon monitoring, and attestations.
• Stress-test Regulation S-P: Conduct table-top drills, assess access controls, enforce encryption, and review vendors.
• Modernize AML: Risk scoring, timely SAR decisions, independent testing that challenges program design.
• Use technology effectively: Case-management, exception trending, and break-rate reporting to separate noise from risk.
• Leverage external expertise: Broker-dealer compliance consulting, exam readiness support, and outsourced remediation add capacity without pulling leaders off revenue-generating work.

Building Compliance for Sustainable Growth

Compliance doesn’t have to be a cost center. With strong ownership, tested controls, and credible documentation, broker-dealers can reduce findings and enable growth across New York, NY, Chicago, IL, Miami, FL, and beyond.

Quadrant Regulatory Group supports firms in strengthening supervision, communications surveillance, Regulation S-P, AML, cybersecurity, and overall SEC/FINRA compliance programs.

If you’re ready to identify and close compliance gaps, we offer confidential, tailored consultations.

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