The North American Securities Administrators Association announced a series of recommended best practices for broker-dealers to consider in order to improve their compliance practices and procedures at its annual conference in San Diego.

The best practices were developed after a nationwide series of examinations of broker-dealers state examiners in 28 NASAA jurisdictions in the U.S. revealed a significant number of problem areas, said NASAA president Patricia Struck.

“These recommended best practices are designed to promote the better understanding of compliance challenges among regulators, broker-dealers and their representatives,” Struck said. “This information can assist broker-dealers develop compliance programs to reduce the potential for regulatory violations and, in turn, build investor confidence in their activities.”

NASAA Broker-Dealer section chairwoman and Illinois securities director Tanya Solov said 228 examinations of broker dealers were conducted between May 1 and June 30. Of the examinations, 85%, or 193, involved smaller branch offices employing five or less registered representatives; and 15% involved larger offices with six or more registered representatives.

Overall, the examinations found 654 deficiencies in five compliance areas. The greatest number of deficiencies (49%) identified in the examinations involved books and records, followed by supervision (22%), sales practices (16%), registration and licensing (7%), and operations (6%).

Solov said the three most common deficiencies involved maintenance of customer account information, suitability, and failure to follow written procedures.

The three most common books and records deficiencies involved maintenance of customer new account information, seminar advertising and sales literature, and outgoing/incoming correspondence. In the area of supervision, the most common deficiencies concerned the failure to follow written supervisory procedures, internal audits, and written supervisory procedures not maintained as current.

The most common deficiencies found in the area of sales practices involved suitability, outside business activity and selling away, and variable product suitability.