SupervisionSICOR Securities, Inc.

Why?

NASD 3110 requires the firm to “…establish and maintain a system to supervise the activities of each registered representative, registered principal, and other associated person that is reasonably designed to achieve compliance with applicable securities laws and regulations, and with applicable NASD Rules.”

Requirement

“…establish, maintain, and enforce written procedures to supervise the types of business in which it engages and to supervise the activities of registered representatives…”.

How Do We Do It?

By publishing, for your reference, the firm’s written supervisory policies and procedures.

By requiring your participation in annual continuing education relating to securities business conduct.

By utilizing an “acceptance” system of each prospective customer before authorizing any customer service.

By utilizing an “approval” system for each proposed recommendation and each “new business” securities transaction.

By reviewing your annual disclosures (Compliance Review) and conducting an annual interview regarding your business conduct. (NASD Rule 3110)

… By pre-approving your customer communications,

marketing materials, seminar systems, advertisements, etc.

By review of your electronic communications. (SEC Rule 17a-4(b)(4) and NASD Rule 3110)

By confirming changes in a customer’s investment objectives. (SEC Rule 17a-3, NASD 3012(a)(2)(B))

By confirming changes of the customer’s address(es). (SEC Rule 17a-3, NASD 3012(a)(2)(B))

By confirming changes of ownership (title) of any customer account. (SEC Rule 17a-3)

By requiring customer written instruction for transfer of assets to a third party custodian. (SEC Rule 17a-3, NASD 3012(a)(2)(B))

…

By performance of branch office audits. By reviewing your records of customer contact; your

daily appointment book, your anecdotal notes of discussions, your lists of seminar attendees, your lists of persons to whom you provided vendor marketing materials, etc. which document how you are conducting the securities business of the firm.

What Happens When…

…you communicate electronically with a (prospective) customer: When you receive an e-mail message concerning a

(prospective) customer’s investment objectives, recommendation inquiry, or requesting information regarding securities, FORWARD the e-mail message to archive@sicor.biz

When you send an e-mail message (any and all content if it relates to your conduct of the securities business of the firm; whether or not it references securities), CC it to archive@sicor.biz

E-mail messages discussing securities must be pre-approved by a supervisor.

We prefer (but it is not, currently, required) that you utilize the firm supplied e-mail system for all securities business e-mail.

Instant Messaging

Unfortunately, in a geographically dispersed firm, we are not able to implement the necessary archival systems “…to preserve for a period of not less than three years, the first two years in an easily accessible place, originals of all communications received and copies of all communications sent …”, required by the SEC, in order to allow the use of Instant Messaging between representatives and customers relating to the conduct of a securities business.

The use of Instant Messaging in communicating with (prospective) customers regarding securities is prohibited.

What Happens When…

…there is a change in the customer’s investment objectives: We print, from the database, the firm’s Personal Profile – Annual

Review which itemizes the currently known information. We mail this document, with a cover letter, to the customer

explaining that changes have been made, that they should verify the accuracy of the information and notify the firm, immediately, of any errors.

A supervisor is ALERTed to review the current updated information. If the change was not initiated by the customer’s representative, the

representative is ALERTed to review the updated information.

What Happens When…

…there is a change in the customer’s address: We mail a letter to both the customer’s new and

old addresses with instructions to, immediately, contact the firm if the new address is in error.

In the event that the letter to the new address is return undeliverable by the US Postal Service, the firm will take additional actions deemed appropriate to clarify the situation.

What Happens When…

…there is a request for change of title to a customer’s account: If all current owners have provided written, signed

instruction, we will proceed with the change and send confirmation to all previous owners.

If not, we will contact all current owners for confirmation of the veracity of the instruction before proceeding.

NOTE: This issue would apply to accounts held at SAL Clearing only. All other account title changes will be handled by the custodian firm.