Los Angeles Attorney Sylvia M. Scott
Attorney Sylvia M. Scott is a partner with the Los Angeles office of Freeman, Freeman & Smiley, LLP, where she heads the Securities Regulation Practice Group. Her practice focuses on securities regulation and litigation, and she often represents investment advisors and brokers in regulatory investigations and examinations. She has also successfully represented clients in matters before the Securities Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). Additionally, Sylvia M. Scott advises companies seeking counsel on private placements. She is considered a first-rate securities litigator and expert within the broker-dealer industry and frequently speaks at securities conferences. She has also penned several industry articles and has testified as an expert on securities matters.
Sylvia M. Scott gained her expertise during an 18-year career as a prosecutor and manager with FINRA and SEC. She is admitted to practice in California, the U.S. Court of Appeals for the Ninth Circuit, and the U.S. District Court for the Central District of California. She earned her bachelor of arts from Loyola Marymount University and her juris doctor from the University of California Los Angeles School of Law.
The 2015 NSCP Regional Conference in Anaheim
Sylvia M. Scott currently serves as a partner and the head of the Securities Regulation Practice Group with Freeman Freeman and Smiley, LLP, in Los Angeles, California. On top of her responsibilities with the firm, Sylvia M. Scott contributes her expertise to the National Society of Compliance Professionals (NSCP), a nonprofit organization that supports professionals in the securities field.
In March of 2015, the NSCP hosted its regional conference for the West Coast in Anaheim, California. The one-day seminar was designed to deliver a complete review and explanation of the most recent regulatory issues that face professionals in the compliance industry and service providers who operate in the financial services field. Led by experienced legal professionals and industry experts, the NSCP’s labs and workshops focused on the practical application of compliance procedures and policies.
The NSCP Regional Conference in Anaheim also gave members and nonmembers an opportunity to connect during lunch and various networking breaks. By attending the conference, participants secured CLE and continuing education credits.
Determining High-Risk Areas for Broker-Dealer Examinations
With extensive experience as a securities enforcement counsel, attorney Sylvia Scott operates as a partner at Freeman, Freeman & Smiley, LLP, in Los Angeles. A former FINRA and SEC attorney, Sylvia Scott is aware of the risk-based approach to broker-dealer examinations.
The Financial Industry Regulatory Authority, Inc. (FINRA) routinely conducts examinations on securities brokers and dealers to ascertain whether they are complying with the requisite regulatory guidelines. These examinations are conducted on a risk-based approach.
In determining high-risk areas, FINRA looks at the firm’s staffing. It is particularly interested in firms with part-time compliance officers and those where compliance officers perform multiple functions. These are considered by the regulator to pose a high-risk on compliance.
FINRA will also look at the size of the business with regard to previous expansions. The objective here is to determine whether or not the company has enough compliance controls and staff to meet its expanded needs.
Other aspects that FINRA will look at to determine the extent of risk include the firm’s business model, operations, past efficiency letters, and disciplinary history.
Firms must be prepared for regulatory examinations by identifying their high-risk areas and streamlining them to meet regulatory standards.
The Broker-Dealer Regulatory Examinations
Sylvia Scott, attorney, is a partner at Freeman, Freeman & Smiley, LLP, in Los Angeles. A 2015 Super Lawyer and former senior enforcement counsel at the Financial Industry Regulatory Authority, Inc. (FINRA), Sylvia Scott is knowledgeable about cycle examinations.
Broker-dealers are subject to the oversight and regulation of FINRA and the United States Securities and Exchange Commission (SEC). Both FINRA and the SEC conduct routine examinations on companies in the broker-dealer community to assess compliance with regulatory guidelines.
These exams fall into two categories: cause and routine exams. Cause examinations occur when the regulator suspects there are regulatory or compliance violations. They encompass a wider scope than sweep exams. The cause may arise from a customer complaint, press article, referral from another regulator, or tip.
Routine of cycle exams, on the other hand, are conducted to assess the firms financial and operational areas, as well as certain targeted priority areas.
FINRA conducts most of the securities enforcement examinations of broker-dealers. Before, the examinations were done using a cookie-cutter same approach. Today, however, they are conducted using a risk-based approach, making it far more likely for firms to be cited for violations.
Advocacy of the American Bar Association
Sylvia Scott is an expert securities attorney, an accomplished speaker at industry conferences, and the author of multiple articles on securities regulation and enforcement. Currently a partner at the Los Angeles, California based firm Freeman, Freeman and Smiley, LLP, Sylvia Scott represents companies, investment advisors, and brokers facing regulatory scrutiny before state and national regulatory agencies. Ms. Scott has also been a featured speaker at conferences sponsored by the American Bar Association (ABA).
UCLA School of Law Receives Funding for Environmental Law Scholarships
Sylvia Scott, an attorney based in Los Angeles, California, has been a partner with the firm Freeman, Freeman & Smiley, LLP since 2006. Prior to pursuing her career as a lawyer focused on securities industry litigation, attorney Sylvia Scott attended the UCLA School of Law.
This past April, the UCLA School of Law received collective donations of $250,000 from two charitable foundations to support students interested in the cause of environmental preservation. The Frank D. Boren Scholarships and Summer Fellowships in Environmental Law were named in honor of Frank Boren, who has dedicated his life to the pursuit of environmental health as both an attorney and executive at the Nature Conservancy.
UCLA already holds designation as one of the best schools in the United States for the study of environmental law and is home to the Emmett Institute on Climate Change and the Environment. Administrators for the school have stated that educating students in environmental law is a priority, and they hope to motivate alumni to become strong advocates for sustainability.
How Small Firms Can Prepare for a Cycle Examination
Licensed to practice in California, attorney Sylvia Scott is a partner at the Los Angeles firm Freeman Freeman and Smiley, LLP. Attorney Sylvia Scott, who has won multiple recognitions as a Super Lawyer, counsels brokers and firms of all sizes on how to prepare for a cycle examination.
The Financial Industry Regulatory Authority, commonly referred to as FINRA, regularly performs cycle examinations to ensure firms comply with laws. The exams focus on risk. For small firms, the approach increases the likelihood that an examiner will find a flaw in their process, which can result in enforcement action on the organization as well as their registered professionals.
Fortunately, a smaller firm can safeguard themselves from penalties by hiring or designating a compliance officer. The compliance officer’s sole responsibility is to play devil’s advocate. He or she identifies areas of risk in staffing procedures, business modeling, and operational execution.
Additionally, the firm’s history of deficiency letters and disciplinary action are reviewed to determine what actions can be taken to alleviate regulatory risk. For example, if a firm undergoes an expansion, a compliance officer will assess whether or not enough operational support is available to mitigate potential issues. He or she will offer an honest assessment regarding the staff’s ability to handle larger operational needs as well as constructive feedback on technological tools to ensure that email systems, among other resources, can keep pace with increased use.
The University of California, Los Angeles' Juris Doctor Degree Program
An attorney at Freeman, Freeman & Smiley, LLP in Los Angeles, California, Sylvia Scott possesses over three decades of legal experience and a background in the dealer-broker industry. Sylvia Scott is also a graduate of the University of California, Los Angeles (UCLA) with a juris doctor (JD) from the university’s School of Law. The UCLA School of Law offers an engaging JD program that begins with a dynamic first-year curriculum.
The JD degree program focuses on providing students with a learning experience that features an advanced curriculum and encourages students to begin developing their professional identities right from the start. Eligible candidates include students who maintain minimum course load requirements during each semester throughout the duration of their studies. Additionally, students must graduate within five years of enrolling in the law school.
Requirements for the JD degree program fall into two groups: first-year courses and upper-level courses. First-year courses establish the foundation for the program and introduce students to the study and analysis of law, in addition to other essential aspects such as criminal law, civil procedure, constitutional law, and torts and lawyering skills. To meet their upper-level requirements, students must complete a total of 87 semester credits, which include two mandatory courses in professional responsibility and analytic writing.
For more information on the JD degree program at the UCLA School of Law, visit www.law.ucla.edu/academics/degrees-and-specializations/juris-doctor-program.
The Main Examinations Conducted by the SEC
Three-time Super Lawyer Sylvia Scott is an attorney at Los Angeles-based firm Freeman, Freeman & Smiley, LLP. In addition to her work as an attorney, Sylvia Scott has authored articles for professional legal publications on subjects related to the Securities and Exchange Commission (SEC), including a piece on regulatory examinations.
A routine examination is one of three main types of investigations that the SEC conducts on companies. The other two types are the cause exam and the sweep exam. The principal difference among the three examinations lies in the level of risk that a company poses and the motivation that the regulatory institution has to conduct an investigation.
In a routine exam, a company is inspected based on the standard need for compliance testing among businesses. These examinations occur regularly and are not motivated by suspicion of violations, though higher-risk companies may experience routine exams more frequently than other firms.
Conversely, when a company must submit to a cause examination, the regulatory institution has sought out the firm due to a belief that the firm has breached laws or compliance terms. Cause exams are usually instigated because of a high volume of complaints, negative media reports, or documents found in the process of auditing a partner company.
Like cause exams, sweep examinations are prompted by suspicion of a compliance or legal issue, but these investigations occur when the regulatory institution believes that the problem is large scale or industry wide. Sweep exams take place within a large group of companies and are usually motivated by the findings of professional organizations or media investigations.
The FINRA Annual Examination Priorities Letter
Sylvia Scott is an experienced attorney and graduate of Loyola Marymount University and the University of California, Los Angeles, where she obtained her juris doctorate. Currently, Sylvia Scott serves as a partner at Freeman, Freeman, and Smiley and has drawn on her past experience as a lawyer at FINRA to develop an article to help professionals prepare for FINRA regulatory exams.
The article, titled Broker Dealer Practice Tips: Preparing for Your Next Risk-Based Regulatory Examination, recommends close review of FINRA's annual examination priorities letter. Additionally, she posits it should be circulated to key staff to improve risk management. FINRA, or the Finance Industry Regulatory Authority, is an independent nonprofit organization. Authorized by Congress, FINRA regulates and provides oversight of the financial industry to protect investors and ensure that organizational practices are ethical.
The FINRA examination priorities letters are released once a year and provide a tool for the agency to communicate changes or current topics of importance. The most recent letter, released Jan. 5, 2016, was the eleventh letter released. The letter focused on product interest rates, culture, ethics, conflicts of interest, and supervision.
Best Practices for Managing an Examination Process
Sylvia Scott is a lawyer and a proficient regulatory attorney with experience enforcing and defending complex enforcement actions and litigation. As a partner at the Freeman, Freeman, and Smiley law firm in Los Angeles, Sylvia Scott leads the Securities Practice Group and has developed advice to help financial organizations navigate the industry’s complicated regulatory examination processes.
In her article, Broker Dealer Practice Tips: Preparing for Your Next Risk-Based Regulatory Examination, Scott outlines tips and advice to improve organizational success in FINRA and SEC regulatory examines. In addition, the article covers specific best practices that an organization can adopt to manage the examination process.
In addition to the identification of a point person to act as a liaison with the examining agency, organizations should also act in a respectful and courteous manner toward examiners. Communication is another important best practice, and it is critical in maintaining a good working relationship and addressing document and information requests. These document requests should also be logged and responded to quickly, with careful consideration of privileged client communications.