A Financial and Operational Principal (FINOP) is personally accountable for managing the accuracy of financial records, any applicable regulatory reporting requirements and ensuring the firm remains compliant with any relevant net capital rules. Each FINRA member firm is required to assign one person to serve as a FINOP per Rule 1210. In order to become a FINOP, you must pass either the Series 27 or Series 28 exam. This license also qualifies you to serve as Principal Financial Officer and/or Principal Operations Officer.
After passing the Series 27 or 28 exam, this securities license allows you to supervise the following activities: back office operations; preparation and maintenance of the firm’s books and records and compliance with financial responsibility rules that apply to self-clearing broker-dealers and market makers.
Generally, a FINOP is responsible for the following tasks:
- safeguarding and ensuring the accuracy of books and records
- regulatory reporting
- net capital calculation and compliance
- FOCUS reporting
- Securities Investor Protection Corporation (SIPC) fee calculation and reporting
- annual audit support
- FINRA financial exam support.
While some broker dealers are able to utilize a large and broad team of support and accounting back-office staff, this is not the case for all firms and FINRA has acknowledged this reality and that the use of an outsourced FINOP is commonplace. Electing to outsource the FINOP role can be far less costly than hiring a comparable in-house FINOP. Outsourcing standardized tasks and leveraging an outside compliance provider’s knowledge can then allow the in-house compliance team to focus their attention on where it is needed most.