Series 62

Exam Alert: FINRA announces new submission process for Form T

Effective July 5, 2011 FINRA member firms must submit Form T electronically through FINRA’s Firm Gateway rather than email. Form T is a form FINRA requires Continue reading

Effective July 5, 2011 FINRA member firms must submit Form T electronically through FINRA’s Firm Gateway rather than email. Form T is a form FINRA requires member firms submit to report last sale reports, typically after hours trades, of OTC transactions in equity securities. Relevant to the Series 62, Series 55, Series 24, and Series 7 exams.

Source: FINRA Trade Reporting Notice – 6/3/2011

Exam Alert: FINRA pushes back implementation date for higher customer care standards

FINRA has changed the date on which its new know-your-customer and suitability rules will take effect. The new effective date is Continue reading

FINRA has changed the date on which its new know-your-customer and suitability rules (previously mentioned in this exam alert) will take effect. The new effective date is July 9, 2012. FINRA has also answered questions from firms about the new rules; the questions and answers may be found here.

http://www.finra.org/Industry/Regulation/Notices/2011/P123702

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: IRS requires broker-dealers and mutual funds to report cost basis of stocks

Effective January 1, 2011, the IRS requires that when broker-dealers and mutual funds purchase stocks, the cost basis of the stocks must be reported to Continue reading

Effective January 1, 2011, the IRS requires that when broker-dealers and mutual funds purchase stocks, the cost basis of the stocks must be reported to the IRS and to investors. In 2011, this reporting requirement only applies to most stocks, while in 2012 and beyond, the requirement will apply to all stocks. In 2011, the rule will not apply to mutual fund shares and shares purchased via dividend reinvestment plans. Relevant to the Series 6, Series 7, Series 62, Series 65, and Series 66 exams.

IRS news release: http://www.irs.gov/newsroom/article/0,,id=228907,00.html

Analysis by the Securities Technology Monitor: http://www.securitiestechnologymonitor.com/photo_gallery/1_36/27400-1.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: SEC proposes amendment requiring broker-dealers to search for missing securityholders

On March 18, 2011, the SEC proposed an amendment to Rule 17Ad-17, which currently requires transfer agents to look for Continue reading

On March 18, 2011, the SEC proposed an amendment to Rule 17Ad-17, which currently requires transfer agents to look for missing holders of securities. The amendment would extend this obligation to broker-dealers. Two database searches are required: the first one must occur three to twelve months after the securityholder becomes lost, and the second one must take place six to twelve months after the first search.

http://www.sec.gov/rules/proposed/2011/34-64099.pdf

Exam Alert: SEC proposes rule to eliminate credit rating as a condition for short-form securities registration

On February 9, 2011, the SEC voted unanimously to propose an amendment to its rules that would remove credit ratings as a condition Continue reading

On February 9, 2011, the SEC voted unanimously to propose an amendment to its rules that would remove credit ratings as a condition for registration of securities using short-form registration or shelf registration. Instead of a credit rating qualification, the issuer must have issued $1 billion of non-convertible securities in the past three years. This proposed change is part of the Dodd-Frank Act reforms, which among other things require that federal agencies remove references to credit ratings from their rules. Relevant to the Series 79, the Series 24 and the Series 62.

http://www.sec.gov/news/press/2011/2011-41.htm

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.