Written Supervisory Procedures (WSPs)

With the supervisory system and approval requirements in place, the firm needs a written document that spells out exactly how supervision works day to day. That document is the WSP.

Required Content

WSPs must address supervision of all business types the firm engages in and all categories of associated persons. Specifically, WSPs must identify:

  • The specific individuals responsible for each supervisory review
  • The activities they will perform
  • The frequency of review
  • The manner of documentation (how reviews are recorded)

Topics WSPs Must Cover

  • Review of investment banking and securities transactions
  • Correspondence and internal communications review - specifically identifying:
    • Customer complaints
    • Funds and securities transmittals
    • Regulatory-required content
  • Customer complaint handling procedures
  • Supervisory personnel documentation - including:
    • Designations of responsibility
    • Conflict of interest prevention
    • Compensation structure oversight
  • Safeguarding of customer funds and securities

Location and Maintenance

  • A current copy of the WSPs (or the relevant portions for that office) must be kept at each Office of Supervisory Jurisdiction (OSJ) and at each location where supervisory activities are conducted
  • WSPs must be updated promptly whenever changes occur in:
    • Business activities (new products or services)
    • Personnel (supervisory staff changes)
    • Regulations (new or amended rules)

Exam Tip: Gotchas

  • Having WSPs is not enough; they must be current, specific, and accessible. A firm that wrote WSPs five years ago and never updated them after adding options trading is in violation.
  • The exam may present a scenario where a firm has WSPs but they don't cover a new line of business; that is a supervisory deficiency.
  • WSPs must name specific individuals, not just job titles. "The compliance officer" is not sufficient if the firm doesn't identify who that person is.
  • WSPs must be kept at each OSJ, not just at the home office.
  • Outdated WSPs that don't reflect current business = violation.