FINRA Rule 3241: Registered Person as Customer’s Beneficiary

FINRA Rule 3241: Registered Person as Customer’s Beneficiary

On October 29, 2020 FINRA released a regulatory notice detailing Rule 3241, a new rule that limits any associated person of a member firm who is registered with FINRA from being named a beneficiary, executor or trustee, or to have a power of attorney or similar position of trust for or on behalf of a customer. The rule requires the member firm with which the registered person is associated, upon receiving required written notice from the registered person, to review and approve or disapprove the registered person assuming such status or acting in such capacity. Rule 3241 does not apply where the customer is a member of the registered person’s “immediate family, and becomes effective February 15, 2021

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Custody of Cryptocurrency

UTMA and UGMA Custodial Accounts

Uniform Transfers to Minors Act (UTMA) and Uniform Gifts to Minors Act (UGMA) custodial accounts provide a way to transfer property to a minor beneficiary without the need for a trust. The custodian then must transfer the ownership of this account to the minor at the age of majority.

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Form CRS Updates in 2020 (Part 2)

Investment Advisers Act: Know the Rules or Pay the Price

Knowing firm requirements as set forth in the Investment Advisers Act is essential, and learning from the mistakes of others in this area can be a valuable and motivating tool for striving for compliance in the financial services industry. In an atmosphere where Chief Compliance Officers (CCO) are being added to disciplinary proceedings, learning and taking immediate corrective action is the name of the game. No longer is the firm the only name blasted across SEC complaints; regulators will ensure that individuals are equally held responsible. Read More…

Supervisory Control

Supervisory Control: The Basics of Rule 3120

Most broker-dealers are aware of their annual requirement to test and document their firm’s compliance program. But, the question remains if firms are meeting the full requirements of the rule. Below are the basics of the former NASD Rule 3012, now FINRA Rule 3120, for establishing and maintaining a system of supervisory control. Read More…

Supervision

Supervision of Supervisory Personnel

FINRA Rule 3110 provides the requirements for building and maintaining a supervisory structure that is in compliance with rules and regulations. Among other requirements, this rule addresses the documentation and supervision of supervisory personnel in 3110(b)(6). What is FINRA Rule 3110(b)(6)? Rule 3110(b)(6) requires firms to document supervisory functions and responsibilities of each registered supervisory principal. It also establishes procedures to prohibit self-supervision and situations in which the supervisory principal reports to and/or has their compensation or continued employment determined by an individual or individuals that they are supervising. Lastly, it provides a carve-out for those who are unable to Read more about Supervision of Supervisory Personnel[…]

Best Execution

Best Execution Violation Takeaways

Disciplinary actions are often the best way to answer questions such as “how did this happen” or “what can we do differently”. Recently, a member firm named Robinhood Financial LLC was fined $1.25 million for best execution violations. Their shortcomings can provide valuable takeaways to assist other firms in building and solidifying their compliance program.

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