Outside Business Activities: Their Business Is Your ...

1 2016 Financial Industry Regulatory Authority, Inc. All rights reserved. 1 Outside Business Activities: Their Business Is Your Business Tuesday, May 24 3:00 4:00 Join industry practitioners and FINRA staff as they cover the key requirements of the Outside Business activity (OBA) rules and supervising private securities transactions (PST). FINRA panelists discuss common OBA deficiencies found during examinations. Panelists share effective practices regarding policies and procedures for identifying, documenting and disclosing OBAs. Moderator: John Hickey Deputy District Director FINRA New York District Office Panelists: Shawn McLaughlin President and Chief Executive Officer McLaughlin Ryder Investments, Inc. Greg Sudlow Examination Manager FINRA Philadelphia District Office Gregory Teese Chief Compliance Officer Equity Services, Inc. 2016 Financial Industry Regulatory Authority, Inc.

2 All rights reserved. 2 Outside Business Activities: Their Business Is Your Business Panelist Bios: Moderator: John Hickey is the Deputy District Director for the FINRA New York District Office. He supports the Director in leading and managing the cycle and Branch regulatory programs for approximately 1000 member firms. Additionally, he works with the Regional Director, District Director, Associate District Directors and Surveillance Directors to develop and implement strategic and tactical measures necessary to ensure timely, high-quality completion of District s regulatory programs. Prior to this role, John served as an Associate Director at FINRA and managed a unit of approximately 23 individuals responsible for conducting cycle , cause and branch examinations of several member firms. John has over 16 years of regulatory experience while employed at FINRA and prior to that at NASD and has worked as an examiner, supervisor and manager during his career.

3 Before joining NASD, John spent three years in the Operations Department at a clearing firm, where he worked in the Margin Department. Mr. Hickey has a in Management from University of Rhode Island. Mr. Hickey also holds the Certified Regulatory and Compliance ProfessionalTM, CRCPTM designation. Panelists: Shawn P. McLaughlin, AIF is the President & CEO, McLaughlin Ryder Investments, Inc. With more than thirty years of investment experience, Mr. McLaughlin specializes in helping individuals, businesses and associations achieve Their investment goals through careful and thorough financial planning. Mr. McLaughlin began his career with a major regional brokerage firm where he spent twenty years building his practice. Mr. McLaughlin started his own firm thirteen years ago and has owned his broker-dealer for six years. Mr. McLaughlin earned his Bachelor of Science in Business Administration from Georgetown University and remains active as a mentor to students in Georgetown's Business school.

4 Mr. McLaughlin has been active in the Northern Virginia Business and civic communities for more than thirty years. In March 2008, Mr. McLaughlin was elected to the Board of Directors of Burke & Herbert Bank, Virginia's oldest bank. Mr. McLaughlin was elected Chairman of the Board of Trustees of the Virginia College Savings Plan (VCSP) effective January 1, 2010. The VCSP is an independent state agency that offers and manages Virginia's Internal Revenue Code Section 529 plan offerings. It is the largest college savings plan in the country with nearly $60 billion of assets. In January 2010, Mr. McLaughlin accepted an appointment to the Board of Visitors of the School of Business at Marymount University in Arlington, Virginia. He also served served on the Inova Health System Board of Trustees and is the past chairman of the Inova Foundation. Further, Governor Mark Warner appointed Mr.

5 McLaughlin to the Virginia Baseball Stadium Authority. Most recently, Mr. McLaughlin was elected as FINRA s District 9 Small Firm Representative, and he was also elected to the Board of Directors of the Financial Services Institute, which represents independent financial advisors and independent financial services firms. Mr. McLaughlin has been a resident of Alexandria for thirty-four years. Greg Sudlow is a Cause Examination Manager for FINRA. Mr. Sudlow joined FINRA in 2006 as a cycle examiner for the Philadelphia district office spending seven years conducting sales practice investigations including formal actions for Section 5 violations, conversion of customer funds, excessive markups/downs and mutual fund switching. In 2013, Mr. Sudlow accepted a manager position with FINRA s Cause group rapidly shifting that program towards a data driven examination approach with the collection and analysis of electronic trade blotters, account records, and wire order records.

6 Under his leadership, the Cause group has conducted notable investigations in the areas of unsuitable non-traditional ETF sales, private securities transactions, conversion, unauthorized trading, and fraud. Mr. Sudlow was awarded FINRA s Chairman s Award in 2012 in recognition of his contributions to the development of the RDAT program, an automated surveillance tool which intakes and analyzes trade and account data collected from firms in order to detect sales practice risk. In 2014, he was awarded a Gold Level Premier Achievement Award for leading the UIT sales charge discount sweep, covering more than a hundred firms and resulting in $ in customer restitution. Mr. Sudlow is a graduate of Temple University School of Law (2005) where he received a joint JD/MBA. He completed his undergraduate studies at James Madison University (2000, magna cum laude) with a BBA in Finance.

7 He is a member of the Pennsylvania State Bar and a graduate of FINRA s Certified Regulatory and Compliance Professional program offered through the University of Pennsylvania, Wharton School of Business . 2016 Financial Industry Regulatory Authority, Inc. All rights reserved. 3 Gregory D. Teese joined National Life Group in 1989 and has served as the chief compliance officer for its affiliated retail broker-dealer and investment adviser, Equity Services, Inc. since 1997. Mr. Teese also serves as the chief compliance officer of the Sentinel Group Funds; Sentinel Financial Services Company, principal underwriter of the Sentinel Group Funds; Sentinel Asset Management, Inc., the investment adviser for the Sentinel Group Funds; the Sentinel Variable Product Trust; the National Life Variable Annuity Account; and the National Life Variable Life Insurance Account.

8 Mr. Teese earned a BS from the University of Vermont. He holds Series 7, Series 24, Series 63 and Series 65 securities registrations/qualifications. He has served as a member of several FINRA committees, including the Series 6/Series 26 Examinations Committee, the FINRA Compliance Resources and Education Committee Meeting, the FINRA District 11 Committee, the FINRA District 11 Consultative Committee and the District 11 District Nominating Committee. FINRA Annual Conference May 23 25, 2016 Washington, DC Outside Business Activities: Their Business Is Your Business FINRA Annual Conference 2016 FINRA. All rights reserved. Moderator John Hickey, Deputy District Director, FINRA New York District Office Panelists Shawn McLaughlin, President and Chief Executive Officer, McLaughlin Ryder Investments, Inc. Greg Sudlow, Examination Manager, FINRA Philadelphia District Office Gregory Teese, Chief Compliance Officer, Equity Services, Inc.

9 1 Panelists FINRA Annual Conference 2016 FINRA. All rights reserved. Click on the schedule icon on the home screen Choose the Outside Business Activities: Their Business Is Your Business session In the lower right there is an icon: iPhone - Bubble with a bar graph Android - Thumbs up Click on that to see polling questions and responses. 2 To Access Polling FINRA Annual Conference 2016 FINRA. All rights reserved. Unless registered person provides firm with prior written notice in the form specified by the firm, he or she is prohibited from a relationship with another person as: Employee; Independent contractor; Sole proprietor; Officer; Director or partner; or, Being compensated, or have the reasonable expectation of compensation, from another person as a result of any Business activity Outside the scope of relationship with the member firm. 3 Outside Business Activities of Registered Persons(FINRA Rule 3270) FINRA Annual Conference 2016 FINRA.

10 All rights reserved. Scope of compensation Application of the rule is not dependent on prior receipt of compensation by a registered person , registered person working for a start-up company Reasonable expectation of compensation Passive investments and activities subject to NASD Rule 3040 (Private Securities Transactions of an Associated Person) are exempt under the rule. 4 Outside Business Activities of Registered Persons (FINRA Rule 3270) FINRA Annual Conference 2016 FINRA. All rights reserved. Registered persons reporting Outside Business activities (OBA) Prior written notice Form it should take (specified by Firm) When it needs to be submitted Period between submitting written notice and registered person beginning the activity (Firm s policy may address this) Considerations for Compliance With FINRA Rule 3270 5 FINRA Annual Conference 2016 FINRA. All rights reserved.