The Financial Industry Regulatory Authority (FINRA) has issued Regulatory Notice 14-14 and Regulatory Notice 14-15 announcing that it will initiate a review of certain of its rules to ensure that its rules remain relevant and appropriately designed to achieve their objectives. FINRA has indicated that it will prioritize rules for review, taking into consideration a number of factors, including: (i) feedback from FINRA’s Member Relations and Education department as to rules most frequently identified by firms as raising questions or concerns; (ii) input from FINRA’s advisory committees; (iii) observations and experiences of FINRA’s operating departments, including examination findings, enforcement actions, interpretive requests and general questions; (iv) how recently the rule(s) have been amended or subjected to industry feedback; (v) the anticipated length of the review process based on the breadth and complexity of the rule or rule set; and (vi) federal laws, regulations or rules that may preempt or otherwise limit FINRA’s ability to amend rules.
FINRA has identified the following for current review:
- The set of rules governing communications with the public, which includes FINRA Rule 2210 (Communications with the Public), FINRA Rule 2212 (Use of Investment Company Rankings in Retail Communications), FINRA Rule 2213 (Requirements for the Use of Bond Mutual Fund Volatility Ratings), FINRA Rule 2214 (Requirements for Use of Investment Analysis Tools), FINRA Rule 2215 (Communications with the Public Regarding Securities Futures) and FINRA Rule 2216 (Communications with the Public Regarding Collateralized Mortgage Obligations); and
- The set of rules governing gifts, gratuities and non-cash compensation, which includes FINRA Rule 3220 (Influencing or Rewarding Employees of Others), FINRA Rule 2310(c) (Direct Participation Programs), FINRA Rule 2320(g)(4) (Variable Contracts of an Insurance Company), FINRA Rule 5110(h) (Corporate Financing Rule – Underwriting Terms and Arrangements) and FINRA Rule 2830(I)(5) (Investment Company Securities).
FINRA seeks comments responsive to the following questions with respect to the foregoing rules, including any data or evidence in support of the comments:
- Have the rules effectively addressed the problem(s) they were intended to mitigate?
- What have been experiences with implementation of the rule set, including any ambiguities in the rules or challenges to comply with them?
- What have been the costs and benefits arising from FINRA’s rules, and have they been in line with expectations described in the rulemaking?
- Can FINRA make the rules more efficient and effective, including FINRA’s administrative processes?
The comment period for both rule sets expires May 8.
Click here to read FINRA Regulatory Notice 14-14.
Click here to read FINRA Regulatory Notice 14-15.