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The Audit & Compliance Division conducts on-site compliance examinations and for-cause audits of branch and main offices of firms registered to sell securities in Illinois. Compliance examinations are conducted to review the books and records of the entity being examined, and are intended to assure compliance with the Illinois Securities Law and attendant rules. For-cause audits are usually conducted to assist in an enforcement inquiry. The Division currently has 17 auditors and compliance examiners, and field assistance is also provided by other Department personnel. The Division is in constant communication with, and routinely cooperates with, the U.S. Securities & Exchange Commission and the National Association of Securities Dealers, as well as other state and federal regulatory agencies.
The Department will be making amendments to the Securities rules and regulations in order to be consistent with the National Securities Markets Improvement Act of 1996 (NSMIA). The Department is awaiting the Securities and Exchange Commissions' final changes to its rules and regulations. This will also mean that Illinois will change from having one branch office definition to define any location within this state as a branch office, to having a definition of an Office of Supervisory Jurisdiction ("OSJ"), branch office and local office, which will be consistent with the Federal and Self Regulatory Organizations ("SRO") definitions. The books and records requirements will be patterned after the new Federal rules and regulations regarding the same.
Salespersons holding themselves out separately as investment advisers or financial planners remains a problem discovered during audits. In Illinois, anyone holding themselves out to the public as offering these services must register as an investment adviser. In order for a salesperson to rely on an exemption from the definition from an investment adviser they must not hold themselves out to the public as providing investment advisory or financial planning services. All work product must also be approved by the dealer before it is distributed to the customer or the salesperson is deemed to be acting separate and apart from the dealer and the exclusion is not available. This is true regardless of whether any direct fee is involved, because all salespersons receive indirect compensation (commissions).
DISCLAIMER
The Secretary of State, Illinois Securities Department or their information providers shall not be liable regardless of the cause or duration, for any errors, inaccuracies, omissions or untimeliness of the information, or for any delay or interruption in the transmission thereof to the user, or for any claims or losses arising therefrom.
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