WFGS Policies and Procedures Manual July 2016 I Contents INTRODUCTION .............................................................................................................................. 1 1.1 Purpose of the Policy & Procedures Manual.............................................................................................. 1 1.2 Management’s Statement Concerning Compliance .................................................................................... 2 1.3 The Rights of Clients ................................................................................................................................. 2 1.4 Consequences of Not Adhering to Policies & Procedures ........................................................................... 3 1.5 Supplemental Materials .......................................................................................................................... 4 1.6 Policies and Procedures ........................................................................................................................... 4 CODE OF ETHICS ......................................................................................................................... 5 2.1 Philosophy ................................................................................................................................................ 5 2.2 Purpose of the Code .................................................................................................................................. 5 2.3 Standards .................................................................................................................................................. 6 2.4 Conflicts of Interest ................................................................................................................................... 6 2.5 Advertising and Sales Communications ................................................................................................... 7 2.6 Confidential Information .......................................................................................................................... 7 2.7 Direct Payments to APs of Unaffiliated Distributor Organizations ................................................................ 7 2.8 Review ...................................................................................................................................................... 8 2.9 WFGS COMPLIANCE STRUCTURE .............................................................................................. 9 2.10 WFGS Directors & Officers ........................................................................................................................ 10 COMPLIANCE ROLES & RESPONSIBILITIES ..................................................... 10 3.1 Overview ................................................................................................................................................. 10 3.2 Ultimate Designated Person (UDP) ......................................................................................................... 10 3.3 Chief Compliance Officer (CCO) .............................................................................................................. 10 II 3.4 Role of the WFGS Compliance Department ........................................................................................... 11 3.5 Process for Communicating Policies & Procedures .................................................................................... 11 3.6 AP Obligation to Report Contraventions to Head Office ............................................................................. 12 WFGS COMPLIANCE FUNCTION ............................................................................... 12 4.1 Trade Supervision: Follow Up/Resolution ............................................................................................... 13 4.2 Trade Supervision: Records ..................................................................................................................... 13 4.3 Testing Compliance ..................................................................................................................................... 13 4.4 Complaint History .................................................................................................................................... 13 4.5 Maintaining Awareness of Regulatory Changes .......................................................................................... 14 4.6 Education ................................................................................................................................................ 14 HEAD OFFICE SUPERVISION ......................................................................................... 14 5.1 HO Trade Reviews ................................................................................................................................... 14 5.2 Description of Daily Trade 2nd Tier Review Criteria ................................................................................. 14 5.2.1 Documenting 2nd Tier Trade Review ........................................................................................................ 15 5.3 Guidelines Regarding Suitability ............................................................................................................. 15 5.4 Additional HO Reporting/Trend Reviews ............................................................................................... 17 5.5 COMPONENTS OF A SUITABILITY REVIEW .................................................................. 18 5.6 Sampling Trade Tickets ............................................................................................................................ 19 5.7 Sampling: Accuracy of KYC Information ..................................................................................................... 19 5.8 Sampling: New Account/Plan Opening ...................................................................................................... 19 5.9 Review of Trading Activity in Open Leveraged Accounts ............................................................................. 20 HO TRADE REVIEW PROCESS ...................................................................................... 21 6.1 Timeline .................................................................................................................................................. 21 6.2 Documenting Reviews ............................................................................................................................ 22 III 6.3 Query Resolution .................................................................................................................................... 22 6.4 Escalation/Discipline ............................................................................................................................... 23 6.5 HO Trend Reviews/Analysis ..................................................................................................................... 23 6.6 Limited Trading Authorization (LTAs) ....................................................................................................... 25 6.7 Review of Trading Activity in Leveraged Accounts (HO & RBMs) ................................................................. 25 6.8 Additional Leverage Reviews ................................................................................................................. 25 6.9 Types of Products Offered at WFGS ................................................................................................................ 26 6.10 Definition of an Off-book Transaction ....................................................................................................... 26 6.11 Procedure: Off-book Transactions ............................................................................................................ 26 6.12 Procedure: Out of Jurisdiction Trading ....................................................................................................... 26 6.13 P & P: Trading in Products Without Proficiency ..................................................................................... 27 WFGS PRODUCT DUE DILIGENCE ............................................................................. 28 7.1 List of Approved Products ........................................................................................................................ 28 7.2 Permitted Products ................................................................................................................................. 28 7.3 Product Review Process ............................................................................................................................ 28 7.4 Process of Communicating Product Approvals .......................................................................................... 29 7.5 Know Your Product (KYP)........................................................................................................................... 30 7.6 Due Diligence Core 3rd Party Service Providers ..................................................................................... 30 BRANCH REVIEW REQUIREMENTS ......................................................................... 30 8.1 Introduction ...........................................................................................................................................