The financial and securities services industry is striving to provide transparency and accountability in all aspects of their organizations. Ever changing regulations and enhanced scrutiny has created a demand for tighter controls. Crimcheck has a complete suite of services designed specifically for our clients in the financial and securities services industry. Let us prepare a custom package designed for your specific needs.
U.S. Securities and Exchange Commission
The U.S. Securities and Exchange Commission (SEC) is a federal government agency which is responsible for enforcing federal securities laws as well as regulating stock and options exchanges and other electronic markets in the U.S.
A search of the SEC will bring back individuals or entities which have committed accounting fraud, provided false information to the SEC, engaged in insider trading or violated any other securities laws.
The SEC is comprised of 5 divisions:
- Corporation Finance – Oversees the registration of transactions made by companies and the disclosures made by public companies. The Corporation Finance division is also responsible for the operation of the Electronic Data Gathering, Analysis and Retrieval System (EDGAR).
- Trading and Markets – Oversees all self-regulatory organizations, broker-dealer firms and investment houses.
- Investment Management – Oversees investment companies and administers federal securities laws.
- Enforcement – Privately investigates violations of the securities regulations and laws and brings action against those who violate them. The SEC can only bring civil action or administrative proceedings against violators (it does not have criminal authority).
- Risk, Strategy and Financial Innovation – Identifies developing trends and risks in the financial markets including economic analysis, strategic research and financial analysis.
Financial Industry Regulatory Authority
Formerly the National Association of Securities Dealers, the Financial Industry Regulatory Authority or FINRA, is a non-governmental agency that financially regulates member brokerage firms and exchange markets.
FINRA Regulatory Actions
Crimcheck can search the FINRA Disciplinary Actions database for any disciplinary actions taken against an organization or an individual. If a record is found, it will include the case number, document text, date range, document type and individual or firm name.
FINRA Broker Check
Crimcheck can also search the FINRA Broker Check which includes information of current and former FIRNA-registered brokerage firms and brokers.
Uniform Commercial Code (UCC)
The Uniform Commercial Code is a set of laws that deals with sales and commercial transactions. The goal was to create order and harmonize all state laws since commercial transactions often extend from state to state. The article was first published in 1952. The UCC deals mostly with transactions involving personal property rather than real property.
The UCC is separated into 9 different articles which each concern different areas of commercial law:
Article 1 – General Provisions: Provides definitions, interpretations and general principals which apply to every article in the code.
Article 2 – Sales: Covers the sale of goods
Article 2A – Leases: An amendment to Article 2 which instituted rules for the leasing or renting of personal property. This article does not deal with real property – like houses or apartments.
Article 3 – Negotiable Instruments: Deals with negotiable instruments, like promissory notes and checks.
Article 4 – Bank Deposits: Covers bank and their checks and other financial documents.
Article 4A – Funds Transfers: Deals with the transfer of funds from one party to another.
Article 5 – Letters of Credit: provides laws on transactions which involve letters of credit.
Article 6 – Bulk Transfers and Bulk Sales: Requires buyers who order that majority of the inventory for certain types of businesses to notify creditors of the seller of the inventory so the creditors can ensure the seller pays the debts before receiving payment from the buyer.
Article 7 – Warehouse Receipts, Bills of Lading and Other Documents of Title: Regulations which cover the issuance and transfer of warehouse receipts and bills of lading.
Article 8 – Investments Securities: Rules which deal with the issuance and transfer of stocks, bonds and investment securities
Article 9 – Secured Transactions: Deals with security interests in real property.
National Futures Association
The National Futures Association (NFA) is an independent organization which regulates the futures industry in the U.S. Its main objectives include protecting investors from fraudulent commodities and futures activities, providing mediation and arbitration for the resolution of consumer complaints, and fighting and preventing fraud and abuse in the futures markets. It requires rigorous registration requirements, strict compliance rules, a severe enforcement authority and market surveillance that acts in real-time.
NFA membership is mandatory for all members in the futures market. It ensures that all U.S. futures exchanges are held to the same high standards of conduct. The NFA was created in 1982 under the Commodity Exchange Act by the Commodity Futures Trading Commission as to regulate the futures markets. The NFA is financed by the membership dues and assessment feed from the futures markets users. NFA has headquarters in Chicago and also has an office in New York City.
Crimcheck uses the Background Affiliation Status Information Center (BASIC) to search for current and past registration information and disciplinary information for all current and former registrants of the Commodity Futures Trading Commission.
Compliance
All NFA members must adhere to strict compliance including:
- All members must maintain inspection books and records which explain all aspects of their futures business. These must be kept at the member’s business for 5 years.
- The NFA must undergo periodic on-site inspection audits as a way to monitor compliance.
- Members must observe standards in regards to public communications, including promotional materials.
- Members must institute a Business Continuity and Disaster Recovery Plan in the event of an emergency. This assures that the member can continue operation, re-establish operation or transfer the business to another member if necessary.
Specific members must implement enhanced supervisory requirements which are intended to prevent sales practice abuse. Members which must adhere to this are those whose sales forces have been affected by questionable sales practice training or which charge high commissions and fees.
Federal Financial Institutions Examination Council (FFIEC)
The Federal Financial Institutions Examination Council, or FFIEC, is a formal interagency body of the United States government empowered to prescribe uniform principles, standards, and report forms for the federal examination of financial institutions by the Federal Reserve Board of Governors (FRB), the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), the Office of the Comptroller of the Currency (OCC), and the Consumer Financial Protection Bureau (CFPB) and to make recommendations to promote uniformity in the supervision of financial institutions. It also oversees the systems of real estate appraisal in the United States.
Income Tax Return Verification
Crimcheck offers Income Tax Return Verification (ITRV) (formerly Verification of Payment of Taxes) was developed and is administered directly from the Internal Revenue Service. ITRV can be used to verify personal and business income tax returns. ITRV reduces fraud by matching name, social security number and address data to official governmental records of the IRS.
ITRV can verify income and past employers, including executive salary and self-employment income. It also can be used as a compliance tool for internal, state and federal regulations. ITRV weeds out the following documents which can be falsified:
- Altered W-2’s
- Forged verifications of deposits
- Altered tax returns
- Counterfeit financial statements
Verify borrower income by requesting the following tax documents:
- Form 1040 series
- 1065
- 1120 series
- Form W-2
- 1099
- 1098
- 5498 Transcript
Tax returns include the following details:
- Income
- Deductions
- Payments and credits
- Profits and losses (for businesses)
- Ancillary schedules
- Amendments
- Extensions
ITRV Verification is usually used for compliance with internal, state and federal regulations, loan originations (Mortgage, Auto and Personal), Employment Verifications (Executive salary and Self-employed income verification), and any other applicant purpose where specific documentation is required.
Terms to Know
Arbitration: The submission of a dispute to a neutral mediator where the parties will resolve a dispute out of court.
Bills of Lading: A document which shows the carrier has delivered an item to the buyer.
Carriers: Transporters of goods
Commodity: An item or good of commerce
Electronic Data Gathering, Analysis and Retrieval system (EDGAR): Online database where investors can access all information filed with the Securities and Exchange Commission.
Exchange: A marketplace where securities and other financial instruments are traded.
Financial Market: Any marketplace where buyers and sellers participate in trading assets. The assets traded can include equities, bonds, currencies and derivatives.
Futures: A financial contract which the buyer is obligated to purchase an asset or the seller is obligated to sell an asset at a predetermined future date and price.
Investment Houses: A corporation or trust in the investing business which guarantees the underwriting of securities of another person or enterprise
Letters of Credit: A letter from a bank which serves to guarantee payment of the purchases of a buyer made to a specific person with specific conditions.
Mediation: A confidential way for people to resolve disputes with the use of a neutral mediator.
Mutual Funds: A professionally managed investment program which has been funded by shareholders for the purpose of investing in securities.
Personal Property: All of a person’s moveable property (does not include land or real estate)
Real Property: Immovable property consisting of land or buildings (example: house, apartment)
Securities Market: An exchange where security trading is conducted by professional stockbrokers.
Security Interest: A partial or total claim to a piece of property to secure the payment of a debt
