Earlier this month, FINRA hosted a Small Firm Conference Call to discuss updates and implications of COVID-19 (Coronavirus). If you were not able to listen to the call live, a replay recording is available on demand. This recording provides and discusses many highlights noted in the FAQs Related to Coronavirus Pandemic.
Since there was a wealth of information discussed, this is the second of two blog posts where we break down the content from the call and cover as many key points as possible. If you haven’t already, be sure to check out Part 1 for additional topics of note.
Branch Audits
FINRA recognizes that changes to a firm’s branch schedule and onsite exams may be unavoidable. Consequently, FINRA encourages firms to make a good faith effort and evaluate risk factors and shelter in place orders. Be sure to document the reasoning behind implementing any changes and adjust the plan accordingly when the situation changes.
Net Capital
FINRA worked with the Securities and Exchange Commission (SEC) to provide some relief under any loans taken under the CARES Act program. The FAQ from FINRA also provided more net capital guidance on this topic.
FINRA Rule 3120 and 3130 Certifications
Temporary relief has been granted for some firms regarding Rule 3120 and 3130 requirements. Members whose annual deadlines for these requirements are typically from March 1 to May 1 now have until May 31, 2020 to complete the process for certifications. In addition, the Chief Compliance Officer and Chief Executive Officer may conduct virtual meetings to meet these requirements.
Filing Extensions for FOCUS and Annual Reports
In March, FINRA issued an FAQ on Focus Filings and Annual Audit Reports. There was a 10-business day extension in some circumstances (i.e. exemptions from carrying customers). It applies for February, March, and April 2020. For annual audits, an additional 30 calendar days for audits due January to March 2020. As things unfold, more relief may be provided.
Quarterly Complaints
The April 15th deadline for quarterly complaints under FINRA Rule 4530 has been extended to May 31, 2020.
Best Execution
The Best Execution FAQ makes clear that reasonable diligence should be assessed within the context of the market.
Reporting Suspected Fraud to FINRA
If a firm learns of suspected fraud, the COVID-19 FINRA page provides a whistleblower contact information. There is also a retail investor FAQ on Fraud and the Coronavirus that provides contact information and guidance on diverse types of fraud schemes during COVID-19.
FINRA is eager and open to collecting feedback from its members as the world evolves and changes are occurring at a rapid pace.
For additional considerations for firms during these unprecedented times, check out our previous blog posts related to COVID-19. If you would like more expert consulting in any areas mentioned above or designing a custom program, please contact us today.