Networking Arrangements

What this video covers

• What constitutes a networking arrangement, and why the member firm, not the bank, is always the registered broker-dealer
• The four mandatory elements of a networking arrangement written agreement: responsibilities, compensation, SEC Regulation R obligations, and regulatory access
• The four non-negotiable customer disclosures: not Federal Deposit Insurance Corporation (FDIC) insured, not a deposit or obligation of the institution, not guaranteed, subject to investment risk including loss of principal
• When oral disclosure is required in addition to written disclosure, and why the trigger is the location of the account opening not the location of the customer
• The physical separation and identification requirements, and what "to the extent practicable" means for small branches
• The strict limit on unregistered bank employee compensation: a one-time nominal cash referral fee contingent only on the customer contacting the broker-dealer, never on account opening or trading
• How the Gramm-Leach-Bliley Act (GLBA) functional exceptions shield banks from broker registration, and how transaction-based payments to bank employees blow up that exception