Rules and Regulations Archives

Communication Recordkeeping in the Day of the Hybrid Workforce

Posted on May 31, 2023 by SCM Communications

All broker dealers have recordkeeping obligations required by Rule 17a-4(b)(4) under the Securities Exchange Act of 1934. Among the list of required obligations is communication recordkeeping. This includes incoming as well as outgoing communications with respect to the broker dealer. Further instructions were given by the Financial Industry Regulatory Authority (“FINRA”) in FINRA 11-39 and later in FINRA 17-18. This is noted because over the course of the past years, the hybrid work environment has become the norm. With this, more and more communication software and applications have become available to the public to ease the transition between working from Read more about Communication Recordkeeping in the Day of the Hybrid Workforce[…]

FINRA announces OFAC search tool is retiring.

FINRA OFAC Search Tool Retiring

Posted on December 15, 2022 by SCM Communications

Financial Industry Regulatory Authority (“FINRA”) provides an OFAC search tool that many industry member firm’s use as part of their onboarding process for risk-based background reviews. As of January 3, 2023, FINRA’s OFAC search tool will be retired. We recommend that you notify all staff that normally do OFAC checks for your Firm so they can become familiar with the OFAC tool available through the United States Department of Treasury. What is OFAC? The Office of Foreign Assets Control (OFAC) is the government agency that maintains the OFAC list. The OFAC list is a publicly available list and is made Read more about FINRA OFAC Search Tool Retiring[…]

Regulatory Notice 22-12 TRACE Amendments

Posted on September 20, 2022 by SCM Communications

FINRA Adopts Amendments to TRACE Reporting Rule to Require Identification of Portfolio Trades Effective May 15, 2023 if you trade in TRACE-eligible securities and those securities are part of a portfolio trade, you will be required to input an appropriate modifier. The Sale Condition 4 modifier, available via the TRAQS secure web browser and the TRACE FIX protocol (Tag 22004), will be available for this designation. Regulatory Notice 22-12 provides information on the new requirement and considerations for compliance. Background FINRA has amended Rule 6730 to require members to append a new portfolio trade modifier when reporting corporate bond trades Read more about Regulatory Notice 22-12 TRACE Amendments[…]

Private Placement Best Practices from FINRA Disciplinary Actions

Posted on August 19, 2022 by admin

FINRA (Financial Industry Regulatory Authority) publishes a monthly review of disciplinary actions taken against both firms and individuals. These disciplinary actions are useful tools to look for trends in violations and other sanctions. These trends can assist you in identifying weak areas in your Firm’s compliance programs or surveillance. Below is a list of a few recent actions related to unregistered offerings or private placements including links to learn more about each as well as key takeaways. Due diligence obligations in connection with private offerings- Torch Securities In summary, Torch Securities failed to establish and maintain WSPs reasonably designed to Read more about Private Placement Best Practices from FINRA Disciplinary Actions[…]

FINRA Unscripted Podcast: FINRA Rules 2165 and 4512

Posted on August 11, 2022 by admin

In May, FINRA released a podcast The Essential Senior Investor Protection Tools: FINRA Rules 2165 and 4512. This podcast provides a great update on the background of FINRA rules 4512 and 2165 and examples of their effectiveness over a short time frame of implementation. Two members of FINRA’s general counsel who support FINRA on the policy making side were the guests on the show. A few highlights from the podcast: FINRA Rule 2165 FINRA Rule 2165 allows a broker-dealer to place a temporary hold on a disbursement of funds or a transaction if there’s a reasonable suspicion of financial exploitation Read more about FINRA Unscripted Podcast: FINRA Rules 2165 and 4512[…]

Options Disclosure Document Update

Posted on August 5, 2022 by admin

This is a reminder for broker-dealers who provide options services to their clients, that certain disclosure documents are required including the options disclosure document (“ODD”). In May 2022, FINRA provided an information notice to update firms on the options clearing corporation (“OCC”) disclosure document issued in March 2022. Under rule 9b-1 of the Securities Exchange Act broker-dealers are required to deliver the ODD and supplements to customers. FINRA has similar requirements in FINRA Rule 2360(b)(11)(A)(1), which, among other things, requires firms to deliver the current ODD to each customer at or before the time the customer is approved to trade Read more about Options Disclosure Document Update[…]