Girard Securities has told its advisers that an SEC audit of the firm is focusing on supervision of branch offices, part of an industry-wide move by the agency.
“On the first Monday of 2015, the first call I received was from the SEC informing me that they were going to be conducting an audit,” according to a recent memo by Susie Woltman Tietjen, chairman and chief executive of
Girard. “I asked if this was a routine broker-dealer and RIA exam and was told it was not. The focus of the exam is not going to be on the home office but rather the supervision of our registered representatives and financial advisers in branch offices. The data request we have received is massive and requires us to pull data from multiple systems and format the data in a very precise manner.”
Girard is not alone, according to Ms. Teitjen's memo. “Other firms that I have spoken to have received similar requests and the consistent comment is that, no one has ever seen a data request of this size and scope,” according to the memo. Finra will conduct a routine audit of the firm beginning March 9, according to the memo.
Broker-dealers dread requests from regulators that involve big dumps of data. Such requests eat up staff hours and often leave firms bewildered as to what regulators are truly looking for as data is compiled.
In August, RCS Capital Corp., known by its ticker RCAP, said it had
agreed to buy the privately held Girard, which has about 250 producing financial advisers and $10 billion of assets under administration. At that time, nontraded real estate investment trust czar Nicholas Schorsch was executive chairman of RCAP. He resigned that position in December as part of his wide withdrawal from the various public entities he controls.
Ms. Tietjen, who was outside the office and didn't respond to an email and phone call, said in the memo that Girard is expecting approval of the acquisition at the end of February by the Financial Industry Regulatory Authority Inc..
Girard's chief compliance officer, Patti Kuhlman, also did not return a phone call and email seeking comment.
A spokesman for the Securities and Exchange Commission, Kevin Callahan, declined to comment on the matter.
The SEC, however, in a press release in mid-January released its
examination priorities of 2015. That list included a focus on broker-dealers supervision of reps and advisers in branch offices. That effort is a part of a wider SEC focus this year on “protecting retail investors and investors saving for retirement,” according to the SEC.
The SEC exam of broker-dealer supervision of branch offices will include “using data analytics to identify branches that may be deviating from compliance practices of the firm's home office,” according to the SEC exam priorities notice.
