How do SROs make sure brokers and dealers comply with the rules?
Every firm that is a member of an SRO binds itself to follow the rules and regulations of the SRO upon qualifying for membership. Every investment dealer has a senior-level compliance department. This area’s task is to make sure the rules and by-laws are followed in letter and spirit, compliance is also responsible for filing regular financial and operational reports to the SROs to provide an early warning system for problems.
The SROs work with compliance departments and monitor all reports. In addition, all brokers and dealers must submit to at least one audit a year, one surprise visit and one surprise financial questionnaire. When they belong to more than one SRO, they can choose which SRO will do the audit and the questionnaire.