Rules and Regulations Archives - Page 4 of 26

Outside Business Activity Disclosure Form Best Practices

Posted on April 29, 2022 by admin

When creating an outside business activity (“OBA”) disclosure form, it’s important to understand how FINRA defines an outside business activity and what information must be disclosed. Firms can request additional information however it is recommended that Firm’s ensure the required information is collected, reviewed and approved by the Firm’s designated principal. What is an Outside Business Activity? An outside business activity (“OBA”) is defined as a registered person acting as an “employee, independent contractor, sole proprietor, officer, director or partner of another person, or be compensated, or have the reasonable expectation of compensation, from any other person as a result Read more about Outside Business Activity Disclosure Form Best Practices[…]

FINRA Announces Rule 4111 (Restricted Firm Obligations) Evaluation Date

Posted on April 15, 2022 by admin

In an Information Notice released February 1, 2022, FINRA announced the first “Evaluation Date” for the new Rule 4111 (Restricted Firm Obligations) on June 1, 2022. Rule 4111 went into effect on January 1, 2022, and addresses firms with a significant history of misconduct. More specifically, it requires member firms that are identified as Restricted Firms to deposit cash or qualified securities in a segregated, restricted account; adhere to specified conditions or restrictions; or comply with a combination of such obligations. Rule 4111 Rule 4111 establishes a multi-step, annual process through which FINRA will determine whether a member firm raises Read more about FINRA Announces Rule 4111 (Restricted Firm Obligations) Evaluation Date[…]

Changes to FINRA Rule 2165: Financial Exploitation of Specified Adults

Posted on April 1, 2022 by admin

FINRA has adopted amendments to Rule 2165 (Financial Exploitation of Specified Adults) to permit member firms to: (1) place a hold on a securities transaction (in addition to the already-permitted hold on a disbursement of funds or securities) where there is a reasonable belief of financial exploitation; and (2) extend a temporary hold on a disbursement or transaction for an additional 30 business days, beyond the current maximum of 25 business days (for a total of 55 business days), if the member firm has reported the matter to a state regulator or agency, or a court of competent jurisdiction. The Read more about Changes to FINRA Rule 2165: Financial Exploitation of Specified Adults[…]

Amendments to FINRA Rules for Security-Based Swaps

Posted on March 4, 2022 by admin

In an effort to clarify the rules regarding security-based swaps (SBS), FINRA has adopted amendments to rules 0180, 4120, and 4220. FINRA had previously adopted temporary relief from the application of most FINRA rules to SBS (Rule 0180), in tandem with temporary exemptive orders issued by the SEC relating to the definition of SBS as securities, as well as an interim pilot program with respect to margin requirements for transactions in CDS held in an account at a member (Rule 4240). These rules expire on February 6, 2022, and April 6, 2022, respectively. Amendments to Rule 0180 FINRA has adopted Read more about Amendments to FINRA Rules for Security-Based Swaps[…]

The 5% Rule (FINRA Rule 2121)

Posted on February 11, 2022 by admin

FINRA Rule 2121, also known as the 5% rule or 5% policy, was adopted to ensure that the investing public receives fair treatment and is charged reasonable rates for brokerage services. The 5% rule is more of a guideline than a rule, as there is no set limit for the amount you can charge as a markup. While 5% was the suggested limit for markups in the past, with how liquid and efficient markets are today, charging around 5% will lead to greater scrutiny from regulators. When Does Rule 2121 Apply? Rule 2121 applies to non-exempt securities in both the Read more about The 5% Rule (FINRA Rule 2121)[…]

Office of Supervisory Jurisdiction (OSJ)

Posted on February 4, 2022 by admin

An Office of Supervisory Jurisdiction (OSJ) is an office identified by the broker-dealer as having supervisory responsibilities for agents and branch offices within its region. The OSJ has final approval of new accounts, and retail communication. The OSJ may also make markets or structure offerings Functions of an OSJ Each member must identify to FINRA which of its offices have been designated as OSJs. An OSJ is any office at which one or more of the following functions take place: Order execution or market making Formation or structuring of public offerings or private placements Custody of customer funds or securities Read more about Office of Supervisory Jurisdiction (OSJ)[…]