12 CFR 151.140 – What policies and procedures must I maintain and follow for securities transactions?
If you effect securities transactions for customers, you must maintain and follow policies and procedures that meet all of the following requirements:
Terms Used In 12 CFR 151.140
- Equitable: Pertaining to civil suits in "equity" rather than in "law." In English legal history, the courts of "law" could order the payment of damages and could afford no other remedy. See damages. A separate court of "equity" could order someone to do something or to cease to do something. See, e.g., injunction. In American jurisprudence, the federal courts have both legal and equitable power, but the distinction is still an important one. For example, a trial by jury is normally available in "law" cases but not in "equity" cases. Source: U.S. Courts
- Settlement: Parties to a lawsuit resolve their difference without having a trial. Settlements often involve the payment of compensation by one party in satisfaction of the other party's claims.
(a) Your policies and procedures must assign responsibility for the supervision of all officers or employees who:
(1) Transmit orders to, or place orders with, registered broker-dealers;
(2) Execute transactions in securities for customers; or
(3) Process orders for notice or settlement purposes, or perform other back office functions for securities transactions that you effect for customers. Policies and procedures for personnel described in this paragraph (a)(3) must provide supervision and reporting lines that are separate from supervision and reporting lines for personnel described in paragraphs (a)(1) and (2) of this section.
(b) Your policies and procedures must provide for the fair and equitable allocation of securities and prices to accounts when you receive orders for the same security at approximately the same time and you place the orders for execution either individually or in combination.
(c) Your policies and procedures must provide for securities transactions in which you act as agent for the buyer and seller (crossing of buy and sell orders) on a fair and equitable basis to the parties to the transaction, where permissible under applicable law.
(d) Your policies and procedures must require your officers and employees to file the personal securities trading reports described at § 151.150, if the officer or employee:
(1) Makes investment recommendations or decisions for the accounts of customers;
(2) Participates in the determination of these recommendations or decisions; or
(3) In connection with their duties, obtains information concerning which securities you intend to purchase, sell, or recommend for purchase or sale.