On October 16, the Financial Industry Regulatory Authority (FINRA) published its 2019 Report on Examination Findings and Observations (Report). Unlike previous years, the Report delineates between examination “findings” and examination “observations.” “Findings” describe violations of a rule or regulation, whereas “observations” refer to suggestions regarding how firms can improve controls and mitigate risk. The annual Report summarizes various findings and observations from recent examinations of its member firms on a range of topics, including the following:
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Susan Light
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FINRA Issues Regulatory Notice on the Annual Compliance Meeting Requirement
By Michael T. Foley & Susan Light on
Posted in Broker-Dealer
On October 18, the Financial Industry Regulatory Authority (FINRA) issued Regulatory Notice 19-34 (Notice) regarding the annual compliance meeting (ACM) requirement in Rule 3110(a)(7) and corresponding Supplementary Material .04 (SM .04). The rule requires each registered representative and registered principal to participate, at least once per year, in an interview or meeting at which compliance…
SEC Approves CBOE’s Proposed Rule Change Regarding the Off-Floor Transfer of Options Positions
By Michael T. Foley & Susan Light on
Posted in Broker-Dealer
On October 17, the Securities and Exchange Commission approved a rule proposal filed by Cboe Exchange, Inc. (CBOE) allowing the off-floor transfers of options positions by Trading Permit Holders (TPHs) under a new circumstance.
Under proposed Rule 6.9, positions in options listed on CBOE would be permitted to be transferred outside CBOE by a TPH in connection with transactions to purchase or redeem creation units of exchange-traded fund (ETF) shares between an “authorized participant” and the issuer of such ETF shares. …
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SEC Issues Order Instituting Proceedings Regarding CBOE’s Proposed Rule Change on Off-Floor Position Transfers
By Michael T. Foley & Susan Light on
Posted in Broker-Dealer
On October 21, the Securities and Exchange Commission (SEC) issued an Order Instituting Proceedings (the Order) to determine whether to approve a proposed rule change filed by Cboe Exchange, Inc. (CBOE) regarding off-floor position transfers.
Generally, CBOE requires a Trading Permit Holder (TPH) to effect transactions in listed options on an exchange. …
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CFTC, FinCEN, and SEC Issue Joint Statement on Activities Involving Digital Assets
On October 11, the leaders of the Commodity Futures Trading Commission (CFTC), the Financial Crimes Enforcement Network (FinCEN), and the Securities and Exchange Commission (collectively, the Agencies) issued a joint statement reminding persons engaged in activities involving digital assets of their anti-money laundering (AML) and countering the financing of terrorism (CFT) obligations under the Bank Secrecy Act of 1970 (BSA).…
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SEC Announces the Formation of Asset Management Advisory Committee
By Susan Light, Michael T. Foley & Adam P. Haft on
Posted in Broker-Dealer
On October 9, the Securities and Exchange Commission announced the formation of its Asset Management Advisory Committee.
The committee will provide the SEC with diverse perspectives on asset management and related advice and recommendations. Topics the committee may address include trends and developments affecting investors and market participants, the effects of globalization, and changes in the role of technology and service providers. …
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FINRA Provides Member Firms with New Reg BI and Form CRS Resources
By Susan Light & Stanley V. Polit on
Posted in Broker-Dealer
On October 8, the Financial Industry Regulatory Authority (FINRA) announced the availability of new resources to assist member forms to comply with the Securities Exchange Commission’s Regulation Best Interest (Reg BI) and Form CRS by the June 30, 2020 compliance deadline. Reg BI establishes a “best interest” standard of conduct for broker-dealers and associated persons when making recommendations to a retail customer in connection with a securities transaction or investment strategy involving securities. In addition to the Reg BI requirements, the SEC also adopted a new rule to require broker-dealers and investment advisers to provide retail investors with a brief relationship summary known as the Form CRS.
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FINRA Issues Regulatory Notice on Disclosure Innovations for Advertisements and Other Public Communications
By Susan Light, James M. Brady & Leonard Licht on
Posted in Broker-Dealer
On September 19, the Financial Industry Regulatory Authority (FINRA) issued Regulatory Notice 19-31 (Notice) addressing disclosure innovations in advertising and other communications with the public. The Notice responds specifically to questions that FINRA has received from member firms about how they can comply with FINRA rules when communicating with their customers. FINRA’s goal in issuing the Notice is to help facilitate simplified and more effective disclosures.…
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SEC Proposes Transparency and Financial Accountability Amendments to CAT NMS Plan
By Susan Light, Michael T. Foley & Adam P. Haft on
Posted in Broker-Dealer
On September 9, the Securities and Exchange Commission voted to propose amendments to the national market system plan (CAT NMS Plan) governing the Consolidated Audit Trail (CAT).
SEC Releases Small Entity Compliance Guide for Regulation Best Interest and Form CRS
By Susan Light, Michael T. Foley & Adam P. Haft on
Posted in Broker-Dealer
On September 9, the Securities and Exchange Commission (SEC) released two small entity compliance guides to assist broker-dealers and investment advisers in complying with the recently adopted Regulation Best Interest (Reg BI) and Form CRS.