Broker-Dealer Controls Regarding Customer Sales of Microcap Securities

This Risk Alert summarizes deficiencies that OCIE staff observed in the controls that certain broker-dealers put in place to comply with obligations related to sales of the securities of microcap companies, including to (1) perform a “reasonable inquiry” in connection with unregistered sales of securities in reliance on Section 4(a)(4) of the Securities Act, and (2) respond to suspicious activity in connection with such sales