On August 7, the Financial Industry Regulatory Authority (FINRA) issued Regulatory Notice 19-26, reminding members of the Securities and Exchange Commission’s (SEC) adoption of a “best interest” standard of conduct for broker-dealers and a relationship summary (Form CRS) delivery obligation.

Continue Reading

On June 21, the Securities and Exchange Commission adopted a package of new rules and rule amendments to establish capital, margin and segregation requirements under Title VII of the Dodd-Frank Act.

The new rules address the following areas:

  • Capital requirements for security-based swap dealers (SBSDs) and major security-based swap participants (MSBSP), for which there is not a prudential regulator (nonbank SBSDs and MSBSPs).
  • Capital requirements for broker-dealers that trade security-based swaps or swaps and are not registered as an SBSD or MSBSP.
  • Minimum net capital requirements for broker-dealers that use internal models to compute net capital.
  • Margin requirements for nonbank SBSDs and MSBSPs with respect to non-cleared security-based swaps.
  • Segregation requirements for SBSDs and stand-alone broker-dealers for cleared and non-cleared security-based swaps.


Continue Reading

On June 20, the Financial Industry Regulatory Authority (FINRA) filed with the Securities and Exchange Commission proposed amendments to FINRA Rule 2210 (Communications with the Public) and FINRA Rule 2241 (Research Analysts and Research Reports) required by the Fair Access to Investment Research Act of 2017.

The proposed amendments would eliminate the “quiet period” for

On June 5, the Securities and Exchange Commission voted to adopt a package of rules and interpretations designed to enhance the quality and transparency of retail investors’ relationships with investment advisers and broker-dealers. Specifically, the SEC approved Regulation Best Interest.
Continue Reading

On May 30, the Securities Exchange Commission approved amendments to the Financial Industry Regulatory Authority’s customer and industry arbitration rules to expand the time period for non-parties to respond to arbitration subpoenas and orders of appearance of witnesses or production of documents.
Continue Reading

On April 16, the Office of Compliance Inspections and Examinations (OCIE) of the Securities and Exchange Commission issued a Risk Alert providing a list of compliance issues related to Regulation S-P, the primary SEC rule regarding privacy notices and safeguard policies of investment advisers and broker-dealers. The issues proscribed in the Risk Alert were identified

On April 19, the Financial Industry Regulatory Authority (FINRA) issued Regulatory Notice 19-15, addressing the criteria used by FINRA to designate member firms that are required to participate in FINRA’s annual business continuity and disaster recovery (BC/DR) testing.

As required by Securities and Exchange Commission Regulation Systems Compliance and Integrity (Regulation SCI), FINRA adopted Rule 4380 in 2015 requiring member firm participation in BC/DR testing. The rule authorizes FINRA to designate firms that are required to participate in FINRA’s annual BC/DR test based on established standards, which FINRA first published in Regulatory Notice 15-43 and updated in Regulatory Notice 18-09. Regulatory Notice 19-15 consolidates FINRA’s designation criteria, as previously announced in Notices 15-43 and 18-09, without change.
Continue Reading

On April 24, the Financial Industry Regulatory Authority (FINRA) announced the formation of the Office of Financial Innovation, which will serve as a central point of coordination for issues related to significant financial innovations by FINRA member firms, particularly new uses of financial technology. The establishment of the Office of Financial Innovation is designed to enhance FINRA’s ability to identify, understand and foster financial innovation in the markets to strengthen investor protection and market integrity.
Continue Reading

On April 25, the Financial Industry Regulatory Authority (FINRA) issued a report relating to its use of fine monies collected in 2018. FINRA issued $61.0 million in fines, and incurred $81.1 million in fine-eligible expenditures (i.e., capital initiatives, strategic expenditures and other activities eligible to be funded by fine monies based on FINRA’s Financial Guiding Principles) in 2018. Since the total of fine-eligible expenditures exceeded the amount of fines issued in 2018, the balance of $20.1 million was funded from FINRA’s reserves.
Continue Reading