Compliance Registered Options Principal - CROP

Categories: Regulations, Tax, Investing

In the broker/dealer world, member firms used to be required to have an individual who oversaw and supervised the trading of options contracts within client accounts. That position was called a Compliance Registered Options Principal (CROP). The CROP supervised the adviser, as well as the clients of that adviser.

To become the CROP, that person had to pass the Series 7 exam, and then the Series 4 exam. The Series 4 exam covers non-equity options trading, equity options trading, customer accounts, margin accounts, and option sales practices.

FINRA did away with the requirement for a CROP, and now only requires a Registered Options Principal (ROP). That position still requires passing the Series 4 exam.

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Finance: What is a Compliance Department...0 Views

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Finance allah shmoop what is a compliance department You know

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that karate or tai chee move where the guy has

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your wrist bent all the way back and he's looking

00:13

at you like your dinner Yeah uncle Well in this

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case he's the compliance department and you're you know complying

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well the same holds true in corporate ranks There are

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myriad laws not just in the securities business that executives

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everywhere have to follow Or this happens Well compliance department's

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comprise lawyers who have like a thousand eight hundred ninety

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seven things they check to be sure that your complying

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with regulations so like you're a sales exact you sell

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routers mostly the banks So that's super expensive dinner on

00:50

your expense account What was that for And what exactly

00:55

could you have been doing Business related at magic marty's

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exotic dance club That company rules what happened That was

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on the cover of the wall street journal How do

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you feel then Yeah comply Don't go there next All

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right You're a mutual fund manager You're visiting up big

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telecom company and you're slowly getting rid of the coffee

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pete's house Blend the three cups of it that you

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had two hours earlier Well from the next stall you

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over here The ceo of the telecom company on his

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cellphone among other noises Talking to his banker about the

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twelve dollars a share premium he hopes to get when

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a t and t buys his company Can you quickly

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put in an order and buy shares No And in

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fact you have call your compliance department as soon as

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you're you know done and halt any trading your fund

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was doing in the stock as you now have very

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inside information Alright well complaints applies also to the way

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forms get filled out the way travel is paid for

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Any quote favor unquote over and above About ten bucks

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worth all that's Something that has to be run through

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the compliance department lawyers to be sure that your behavior

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is you know complying And the same happens for complex

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stock trades as well like you work in a hedge

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fund with a risk manager of the compliance department A

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little bit different Kind of complying there you're down eighteen

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percent on a trade you made just two weeks ago

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What do you d'oh Well guess what By charter of

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your hedge fund or the indenture on it or the

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contractual agreement you set up with your investors you have

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to sell Now even though you think it's a screaming

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by here down eighteen percent you clearly didn't know what

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you were doing when you bought the stock at one

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hundred bucks a share And now it's you know eighty

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two And so now you must comply with your bylaws

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and sell and take your losses Because complying is not

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an optional thing that you just picked the follow or

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not When you feel like it You know kind of

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like romantic relationships used to be before tinder was invented

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