Financial and Operations Principal Responsibilities

Quick Answer

A Financial and Operations Principal (FINOP) is the principal responsible for a broker-dealer's financial and operational compliance functions. The FINOP has final responsibility for preparing and approving the firm's regulatory financial reports and for their accuracy. Those reports derive from books and records kept by people the FINOP supervises and is responsible for. Net-capital and reserve-formula work are separate duties.

The FINOP oversees the firm's financial records, reports, and regulatory financial computations. The FINOP has final responsibility for preparing and approving regulatory financial reports and for their accuracy.

What Does the FINOP Oversee?

  • A Financial and Operations Principal (FINOP) is responsible for a broker-dealer's financial and operational compliance functions.
  • Regulatory financial oversight includes the firm's:
    • Financial reporting
    • Financial records
    • Regulatory financial computations
  • The FINOP has final responsibility for preparing and approving financial reports submitted to securities industry regulatory bodies and for their accuracy.
  • The FINOP supervises people who assist with report preparation.
  • The FINOP supervises and has responsibility for people who maintain the books and records from which those reports derive.
  • The FINOP supervises and performs the broker-dealer's duties under all financial responsibility rules adopted under the Exchange Act.
  • The FINOP has overall supervision of and responsibility for people who administer and maintain the broker-dealer's back-office operations.
  • These responsibilities concern the broker-dealer as a firm.

The FINOP supervises and has responsibility for the people who maintain the books and records from which financial reports derive.

  • Net-capital work and reserve-formula work are separate regulatory duties.
  • These duties are not stages in a prescribed workflow.

Exam Tip: Gotchas

  • The FINOP has firm-level financial and operational responsibility. The role does not focus on servicing one customer account.
  • The FINOP has final responsibility for preparing and approving regulatory financial reports, and for their accuracy. This responsibility applies to financial reports submitted to securities industry regulatory bodies.
  • The FINOP supervises report preparers. This duty applies to people who assist with report preparation.
  • The FINOP supervises and has responsibility for source-record maintainers. Financial reports derive from the books and records those people maintain.
  • The FINOP supervises and performs the broker-dealer's financial responsibility duties. This duty covers all financial responsibility rules adopted under the Exchange Act.
  • The FINOP has overall supervision of and responsibility for back-office personnel. This duty applies to people who administer and maintain the broker-dealer's back-office operations.

What Should You Check on Exam Day?

  • Keep the FINOP role at the broker-dealer level.
  • Include final responsibility for preparing and approving regulatory financial reports, and for their accuracy.
  • Include supervision of people who assist with report preparation.
  • Include supervision of and responsibility for people who maintain source books and records.
  • Treat net-capital and reserve-formula work as separate duties, not workflow stages.