Authority: IC 23-19-6-5

Affected: IC 23-19

Sec. 6. (a) Any broker-dealer that maintains an office in Indiana must designate another office to act as the office of supervisory jurisdiction for that office. Each office in Indiana shall be supervised by a person at the office of supervisory jurisdiction for that office.

(b) The manager of an office of supervisory jurisdiction shall be:

1. (1) responsible for supervision of the offices designated by the broker-dealer; and
2. (2) qualified by examination as a broker-dealer under section 2 of this rule.

(c) The broker-dealer shall notify the division in writing prior to the opening, relocation, or closing of a branch office. Notice via the central registration depository is sufficient to meet this requirement. The notification shall include the following information:

1. (1) The address of the branch office.
2. (2) The anticipated date of opening, relocation, or closing.
3. (3) The address of the office of supervisory jurisdiction designated for that branch office.
4. (4) The name of the manager of the office of supervisory jurisdiction.

(d) The broker-dealer must implement the following:

1. (1) The firm must establish and implement procedures and systems for supervision over the activities of:

   1. (A) agents;
   2. (B) employees; and
   3. (C) Indiana office operations;
2. that are reasonably designed to achieve compliance with applicable state and federal securities laws and regulations.

3. (2) The firm must provide appropriate initial and periodic refresher training to:

   1. (A) supervisors;
   2. (B) employees; and
   3. (C) representatives;
4. regarding the firm's procedures and systems.
5. (3) The firm must provide additional specialized training to supervisors in the procedures and systems referred to in subdivision (1).

6. (4) The firm must take action to correct misconduct. The misconduct may be indicated by, but is not limited to:

   1. (A) activities of unauthorized personnel;
   2. (B) churning;
   3. (C) unauthorized trading;
   4. (D) low level of production but high expenses;
   5. (E) garnishment of wages;
   6. (F) regulatory actions;
   7. (G) prior disciplinary history of one (1) or more customer complaints; and
   8. (H) recent customer complaints.

7. (5) The firm must have an adequate system to track and monitor the status of customer complaints as required by FINRA rules. Compliance with these rules includes, but is not limited to, compliance audits with documentation and corrective action, and the following concerning customer complaints:

   1. (A) Prompt review.
   2. (B) Investigation.
   3. (C) Disclosure.
8. (6) The firm must establish a policy for disciplinary action.
9. (7) The firm must designate a properly qualified supervisor for each employee at an office.
10. (8) The designated supervisor must effectively execute any supervisory duties. To that end, the firm must limit the number of employees that a designated supervisor is responsible for at any time to ensure that the supervisor can effectively execute the supervisory duties.
11. (9) The firm must conduct annual compliance examinations, announced and unannounced, of offices with documentation and corrective action.
12. (10) The firm must establish and implement procedures and systems for reasonable oversight of supervisors.

(e) When a firm designates an office of supervisory jurisdiction, the office of supervisory jurisdiction shall be responsible for the day to day implementation of subsection (d)(1) through (d)(10).

(f) Every branch office located in Indiana shall be open for inspection and examination by the division.

(Securities Division; 710 IAC 4-7-6; filed Jun 28, 2010, 2:36 p.m.: 20100728-IR-710100044FRA; readopted filed May 12, 2016, 1:47 p.m.: 20160608-IR-710160136RFA; readopted filed Nov 30, 2022, 4:01 p.m.: 20221228-IR-710220301RFA)