Heightened Supervision

What this video covers

• The three triggers for heightened supervision: Form MC-400 approval for a statutorily disqualified (SD) person, a risk-pattern flag from complaints or disciplinary history, and a disciplinary settlement order from the SEC or FINRA
• Why heightened supervision is a mandatory structural commitment volunteered by the firm, not a punishment on the supervised person
• The isolation rule for the designated supervisor: zero other supervisory responsibilities for the SD person, with total separation from a generalist principal's existing book
• The six core terms of a typical plan: daily or weekly transaction review, pre-approval of new accounts and correspondence, product restrictions, quarterly on-site compliance visits, annual written attestations, and incorporation into written supervisory procedures (WSPs)
• The exact WSP embedding requirement: the plan must live inside the WSPs with identification of parties, recordkeeping rules, and reference to the underlying MC-400 or disciplinary authority
• The tripartite liability for failure to follow the plan: personal failure-to-supervise charge for the named supervisor, supervisory-system enforcement against the firm, and revocation of MC-400 approval for the SD person
• The exam traps that separate a passing score from a fail: optional vs. mandatory, standalone file vs. WSP embedding, and generalist principal vs. designated supervisor