FINRA

Exam Alert: SEC approves amendments to FINRA TRACE transaction reporting rules

The SEC has approved amendments to transaction reporting rules for FINRA’s TRACE system. Effective May 16, 2011, these amendments cover several Continue reading

The SEC has approved amendments to transaction reporting rules for FINRA’s TRACE system. Effective May 16, 2011, these amendments cover several specific changes. Some of these changes address the structure of the text of the rules, as well simplifying definitions and reporting requirements. The changes add alternative reporting requirements and notification requirements for certain asset-backed securities transactions. They also add the Financial Information eXchange (FIX) as a method to report transactions to TRACE.

http://www.finra.org/Industry/Regulation/Notices/2011/P123566

Exam Alert: SEC approves consolidated FINRA rules on books and records

The SEC has approved a new set of FINRA Rules governing books and records. These rules will be effective December 5, 2011. The rules state that records Continue reading

The SEC has approved a new set of FINRA Rules governing books and records. These rules will be effective December 5, 2011. The rules state that records for which no retention period is given under FINRA or Securities Exchange Act rules must be kept for six years. Firms must now record the name of the agent(s), if any, responsible for an account. Relevant to the Series 6, 7, 62, 24 and 26. Additional changes can be found here: http://www.finra.org/Industry/Regulation/Notices/2011/P123549.

Exam Alert: FINRA clarifies maintenance margin requirements for non-margin eligible equity securities

FINRA has clarified what the customer maintenance margin requirements are for equity securities that are not considered margin securities under Continue reading

FINRA has clarified what the customer maintenance margin requirements are for equity securities that are not considered margin securities under Regulation T. The FINRA notice also clarifies that the maintenance loan value of non-margin eligible equity securities may only be applied to a maintenance margin deficiency, and cannot be used for additional transactions or withdrawals. Firms have until July 1, 2011, to comply with these requirements. Relevant to the Series 7, Series 62 and Series 24 exams.

http://www.finra.org/Industry/Regulation/Notices/2011/P123451

Exam Alert: Proposed FINRA rule will clarify firms’ supervisory responsibilities for outsourced activities

On March 29, 2011, FINRA requested comment on proposed FINRA Rule 3190. The proposed rule makes it clear that when a firm outsources a function or Continue reading

On March 29, 2011, FINRA requested comment on proposed FINRA Rule 3190. The proposed rule makes it clear that when a firm outsources a function or activity to a third party, the firm is still responsible for complying with applicable securities law and FINRA and MSRB rules. This responsibility cannot be delegated to another party. Firms will also be required to have supervisory procedures in place to ensure compliance with the rule.

http://www.finra.org/Industry/Regulation/Notices/2011/P123399

Exam Alert: proposed exam for Operations Professionals will focus on basics

On March 4, 2011, FINRA filed documents with the SEC that describe the content covered by the proposed exam for Operations Professionals. The exam will focus Continue reading

On March 4, 2011, FINRA filed documents with the SEC that describe the content covered by the proposed exam for Operations Professionals. The exam will focus on ethics and basic knowledge of the securities industry regarding products, markets, and broker-dealer activities. An Operations Professional would not be held to the same standard of knowledge about a product as a product specialist or representative selling the product.

FINRA rule filing: http://www.finra.org/Industry/Regulation/RuleFilings/2011/P123267

Analysis by the Securities Technology Monitor: http://www.securitiestechnologymonitor.com/news/-27324-1.html

Exam Alert: FINRA further revises its Sanction Guidelines

Effective March 22, 2011, FINRA has revised its Sanction Guidelines to reflect recent developments in FINRA disciplinary cases. The specific revisions: Continue reading

Effective March 22, 2011, FINRA has revised its Sanction Guidelines to reflect recent developments in FINRA disciplinary cases. The specific revisions:

-clarify the standards required for an order of restitution (repayment)

-recognize that adjudicators may order that ill-gotten gains be paid to the injured party (as opposed to being taken by FINRA as a fine)

-acknowledge that whether a factor is aggravating or mitigating depends on the circumstances of the case

-direct adjudicators to consider sanctions already imposed by other regulators for the same misconduct to see if those sanctions were “sufficiently remedial”

http://www.finra.org/Industry/Regulation/Notices/2011/P123374

Exam Alert: FINRA proposes rule requiring Operations Professionals to register

On March 4, 2011, FINRA filed a proposed rule with the SEC that would require that persons who are both “covered persons” and who perform “covered functions” Continue reading

On March 4, 2011, FINRA filed a proposed rule with the SEC that would require that persons who are both “covered persons” and who perform “covered functions” register as “Operations Professionals.” Operations Professional is a new category of registration that is subject to FINRA’s qualifying exams and continuing education requirements. Essentially, covered persons are those with control over what work takes place, how a member’s money is materially spent, and what material agreements the member is entered into. The list of covered functions is fairly broad, covering many broker-dealer activities.

http://www.finra.org/Industry/Regulation/RuleFilings/2011/P123267

Exam Alert: FINRA reinstitutes short sale exempt marking on trade reports

Effective February 28, 2011, FINRA has reinstituted the “short sale exempt” marking for trade reporting in over-the-counter transactions. In addition, Continue reading

Effective February 28, 2011, FINRA has reinstituted the “short sale exempt” marking for trade reporting in over-the-counter transactions. In addition, Order Audit Trail System (OATS) route reports must include, if applicable, price and a short exempt identifier. “Short sale exempt” indicators are used for short sales of stocks that may be marked “short exempt” under Regulation SHO. Relevant to the Series 7, Series 62 and Series 24 exams.

http://www.finra.org/Industry/Regulation/Notices/2010/P122255

The types of sales that qualify as short exempt may be found under Rules 201(c) and 201(d) of Regulation SHO: http://taft.law.uc.edu/CCL/regSHO/rule201.html#c.

Exam Alert: FINRA revises its Sanction Guidelines

Effective February 9, 2011, FINRA has modified its Sanction Guidelines. These changes incorporate legal precedent from federal courts and the SEC. Continue reading

Effective February 9, 2011, FINRA has modified its Sanction Guidelines. These changes incorporate legal precedent from federal courts and the SEC. The degree of penalties for certain offenses have changed, such as recommending higher fines and firm suspension for “egregious” sales of unregistered securities, particularly in connection with market manipulation. The guidelines for FINRA Rule 8210 now have three categories of violations. Additional details may be found here: http://www.finra.org/Industry/Regulation/Notices/2011/P122910.

Exam Alert: FINRA to adopt consolidated rule on customer confirmations

On June 17, 2011, FINRA Rule 2232, Customer Confirmations, will become effective. This rule consolidates and streamlines the current Continue reading

On June 17, 2011, FINRA Rule 2232, Customer Confirmations, will become effective. This rule consolidates and streamlines the current customer confirmation rules found in NASD and NYSE rules. The rule requires that at or before the completion of a transaction, the customer is given a written confirmation that complies with the requirements of SEA Rule 10b-10. The confirmation must include the settlement date and whether an equity security is callable. Relevant to the Series 7, Series 24, Series 26 and Series 62 exams.

http://www.finra.org/Industry/Regulation/Notices/2010/P122640