This important article for broker-dealers and investment advisers demonstrates that supervision is a matter of company governance—not individual responsibility—marked by compliance with state law (e.g., Caremark), self-regulatory organization rules (i.e., FINRA Rule 3100 et seq.) and certain federal securities law and SEC requirements (i.e., Section 15(g) of the Exchange Act, Section 204A of the Advisers Act, and Rule 206(4)-7) with expectations for a supervisory system that can relieve administrative liability for wrongdoing by employees.  The formula has significant implications for the administration of most financial services companies.