| (a) Supervisory system. Each dealer shall establish, maintain, and enforce a system to supervise the activities of its agents that is reasonably designed to achieve compliance with the Texas Securities Act, Board rules, and all applicable securities laws and regulations. A dealer's supervisory system shall provide, at a minimum, for the following: (1) the establishment and maintenance of written procedures; and (2) the appointment of one or more registered agents to carry out the supervisory responsibilities of the dealer. (b) Written procedures. (1) Each dealer shall establish, maintain, and enforce written procedures to supervise the activities of its agents that are reasonably designed to achieve compliance with the Texas Securities Act, Board rules, and all applicable securities laws and regulations. (2) The dealer's written supervisory procedures shall set forth the supervisory system established by the dealer and shall include the titles and locations of supervisory personnel and the responsibilities of each supervisory person. (3) The dealer shall maintain on an internal record the names of all persons who are designated as supervisory personnel and the dates for which such designation is or was effective. Such record shall be preserved by the dealer for a period of not less than three years, the first two years in an easily accessible place. (4) A current copy of a dealer's written supervisory procedures, or the relevant portions thereof, shall be kept and maintained in each branch office and at each location where supervisory activities are conducted on behalf of the dealer. Each dealer shall amend its written supervisory procedures as appropriate within a reasonable time after changes occur in applicable securities laws and regulations. (c) Internal inspections. Each dealer shall conduct a review, at least annually, of the businesses in which it engages, which review shall be reasonably designed to assist in detecting and preventing violations of and achieving compliance with applicable securities laws and regulations. The dealer shall document this review and provide the documentation to the Securities Commissioner upon request. Each dealer shall review the activities of each office, including the periodic examination of customer accounts to detect and prevent violations of applicable securities laws and regulations. Each branch office of the dealer shall be inspected according to a cycle which shall be set forth in the dealer's written supervisory and inspection procedures. In establishing such cycle, the dealer shall give consideration to the nature and complexity of the securities activities for which the location is responsible, the volume of business done, and the number of associated persons assigned to the location. Each dealer shall retain a written record of the dates upon which each review and internal inspection is conducted. (d) Review of transactions and correspondence. Each dealer shall establish and implement procedures for the review and endorsement by a designated supervisor, in writing on an internal record, of all transactions and for the review by that supervisor of incoming and outgoing written and electronic correspondence of its registered agents with the public relating to the securities activities of such dealer. Such procedures should be in writing and be designed to reasonably supervise each agent. Evidence that these supervisory procedures have been implemented and carried out must be maintained and made available to the Securities Commissioner upon request. |
| Source Note: The provisions of this §115.10 adopted to be effective August 12, 2001, 26 TexReg 5794; amended to be effective January 8, 2006, 30 TexReg 8866 ; amended to be effective August 16, 2010, 35 TexReg 7050 |
