FINRA

Exam Alert: SEC approves revised FINRA telemarketing rule

The SEC has approved a new consolidated FINRA telemarketing rule. The rule will become effective July 29, 2012. The new rule contains provisions that are similar to FTC standards. Continue reading

The SEC has approved a new consolidated FINRA telemarketing rule. The rule will become effective July 29, 2012. The new rule contains provisions that are similar to FTC standards. Changes to the prior rule include:

-Do-not-call lists: Under the old rule, do-not-call requests were required to be honored for five years. Under the new rule, do-not-call requests must be honored indefinitely.

-Unencrypted consumer account numbers: Firms may not buy or sell unencrypted consumer account numbers for telemarketing purposes.

-Submission of billing information: Firms must obtain the informed consent of a customer in order to charge them for a telemarketing transaction. The firm must also identify the account to be charged. If the transaction involves “pre-acquired account information and a free-to-pay conversion feature,” then the firm must make an audio recording of the telemarketing transaction.

-Abandoned calls: Firms may not abandon outbound calls, unless they meet the following safe harbor provisions:

1. The firm employs technology that drops no more than 3% of answered calls over a 30-day period (or the duration of a single calling campaign that lasts less than 30 days).

2. The firm lets the phone ring for 15 seconds or 4 rings before disconnecting the unanswered call.

3. If there is no associated person available to speak with the person answering the call within 2 seconds of the person’s completed greeting, the firm plays a recording giving the name and number of the firm.

4. The firm retains records of compliance with the safe harbor.

-Prerecorded messages: Except as noted above (under “abandoned calls”), firms may not make outbound calls that deliver prerecorded messages unless they have the written consent of the person receiving the call. The call must include an opt-out mechanism, as well.

-Credit card laundering: Credit card laundering is prohibited. Credit card laundering is “the practice of depositing into the credit card system a sales draft that is not the result of a credit card transaction between the cardholder and the firm.” Soliciting someone else to engage in credit card laundering is prohibited as well. Obtaining unauthorized access to the credit card system is also prohibited

These rules also apply to associated persons of a firm.

Source: FINRA Regulatory Notice 12-17

This exam alert applies to the Series 62, Series 6, Series 26, Series 24, Series 7, and Series 82.

Exam Alert: TRACE data feeds to include BSYM

Effective July 25, 2012, FINRA will update the Agency Debt Trade Dissemination Service (ATDS) and the Bond Trade Dissemination Service (BTDS) data feeds to include the BSYM (Bloomberg Symbol) for transactions in fixed income securities. The Web API for Securitized Products will also include the BSYM. Continue reading

The BSYM is a twelve-digit alphanumeric identifier for securities that is assigned by Bloomberg. Note that the BSYM only available for “data receipt processing purposes” on TRACE (Trade Reporting and Compliance Engine). The BSYM may not be used to report trades in fixed income securities to TRACE.

Sources:

TRACE Data Changes (TRACE Notice)

Bloomberg Press Release

This alert applies to the Series 7, Series 24, and Series 62.

Exam Alert: SEC approves changes to FINRA’s Code of Procedure

The SEC has approved amendments to FINRA’s Code of Procedure that modify the specifics of how various proceedings are conducted. These changes will be effective on March 30, 2012. The changes are described as “procedural in nature,” and are generally minor changes, though they affect several different rules. Continue reading

A breakdown of the changes is as follows:

-Service of Complaint: A complaint may be served to the counsel representing a party, instead of to the party directly, if the counsel consents to receive it.

-Filing Papers with Adjudicator: Email may be used to file documents with an adjudicator. Footnotes should be single-spaced. The number of copies to be filed has decreased from three to one (unless otherwise ordered).

-Motion to Withdraw by Attorney: If an attorney representing one of the parties seeks to withdraw, he or she must provide contact information for the party no longer being represented.

-Subjects Discussed at Pre-Hearing Conference: During a pre-hearing conference, a hearing office may act upon relevant portions of transcripts from investigative testimony.

-Fees for Copying Costs During Discovery: FINRA staff determine the rates for copying materials.

-Submission of Evidence: Documents submitted prior to a hearing are not automatically entered into record for that hearing (to minimize duplication).

-Hearing Panel and NAC Decisions: Decisions must be independently stated only if they are not already on record.

-Review Proceedings: The Review Subcommittee may review decisions.

-Oral Argument on Appeal: If a respondent appeals a decision and requests an oral argument, but then abandons the request or is unreasonably unavailable, the reviewing committee/subcommittee may cancel the oral argument.

-Failure to Participate in a Disciplinary Proceeding: The reviewing committee/subcommittee must remand a disciplinary proceeding if the appealing party fails to participate and shows good cause.

-Filing Papers in Eligibility Proceedings: Consent from all parties is no longer required for a hearing panel to extend filing deadlines for an eligibility proceeding.

-Procedural Motions in Eligibility or Expedited Proceedings: The National Adjudicatory Council (NAC) may decide any procedural motion made for an eligibility or expedited proceeding.

Source: FINRA Regulatory Notice 12-12

This alert applies to the Series 62, Series 26, Series 24, Series 7, and Series 82.

Exam Alert: SEC approves consolidated FINRA Best Execution rule

The SEC has approved changes to FINRA’s Best Execution rule that will take effect on May 31, 2012. Four new pieces of supplementary material were added to the rule that address the following topics: securities with limited quotation or pricing information, orders for securities with no U.S. market, customer instructions regarding the routing of orders, and regular and rigorous reviews of execution quality. The new rule is otherwise generally similar to the old rule. Continue reading

Here is a breakdown of the new supplementary material:

1. Supplementary Material .06: Securities with Limited Quotation or Pricing Information

This material replaces the old “Three Quote Rule.” The new material does not specify a minimum number of quotes that must be obtained – rather, it emphasizes that members must be diligent in complying with best execution practices when there are customer orders for securities with limited quotation or pricing information. The material requires that the member have written policies in place to ensure that they meet their best execution requirements.

2. Supplementary Material .07: Orders for Foreign Securities with No U.S. Market

This material states that in order to determine if a firm used reasonable diligence in executing orders in a given market, the firm must analyze the “facts and circumstances” of the situation. The material requires that if a firm trades in a security that does not trade in the U.S., the firm must have written policies in place to ensure best execution of customer orders. The policies must be reviewed regularly.

3. Supplementary Material .08: Customer Instructions Regarding the Routing of Orders

This material specifies that when a customer requests the firm to route their order to a specific market, the firm is not required to make a best execution determination beyond the customer’s instructions. The firm must still process the customer’s order promptly, however.

4. Supplementary Material .09: Regular and Rigorous Review of Execution Quality

This material codifies existing requirements for reviewing the firm’s execution quality. These requirements were previously established through SEC releases and FINRA notices.

Source: FINRA Regulatory Notice 12-13

This alert applies to the Series 62, Series 55, Series 24, and Series 99.

Exam Alert: FINRA requires firms to file SSOI supplement to FOCUS Reports

FINRA Rule 4524, which became effective on February 28, 2012, allows FINRA to require member firms to file supplemental reports to their Financial and Operational Combined Uniform Single (FOCUS) Report. FINRA will require firms to file the Supplemental Statement of Income (SSOI), which provides a more detailed breakdown of certain financials than the Statement of Income page of the FOCUS Report. Firms that derive more than 10% of their revenues from unregistered offerings will be required to complete an Operational Page that requires additional information about each unregistered offering. Firms will have to file the SSOI within 20 business days of the end of each calendar quarter, and the due date for the first required SSOI is October 26, 2012.

Source: FINRA Regulatory Notice 12-11

This alert applies to the Series 24, the Series 26 and the Series 99.

Exam Alert: SEC requests that broker-dealers provide FINRA with SAR information

Member firms must make suspicious activity reports (SARs) and supporting documentation available to FINRA, as well as any information that would reveal the existence of an SAR or any decision not to file an SAR. Continue reading

On January 26, 2012, the SEC issued a letter that authorized FINRA to request suspicious activity reports (SARs) and supporting documentation from member firms when FINRA conducts examinations, investigations, or risk assessment for its examination program. Member firms must make these documents available to FINRA, as well as any information that would reveal the existence of an SAR or any decision not to file an SAR.

Source: FINRA Regulatory Notice 12-08

This alert applies to the Series 79, Series 62, Series 6, Series 26, Series 24, Series 99, Series 7, and Series 82

Solomon Exam Prep Introduces Series 82 Online Exam Simulator

Solomon Exam Prep is pleased to announce our industry-leading online exam simulator for the Series 82!

If you have to take the FINRA Series 82 Private Securities Offerings exam, and want as much practice as possible before you do, then the Solomon Exam Prep online exam simulator is right for you. Continue reading

Solomon Exam Prep is pleased to announce our industry-leading online exam simulator for the Series 82!

If you have to take the FINRA Series 82 Private Securities Offerings exam, and want as much practice as possible before you do, then the Solomon Exam Prep online exam simulator is right for you.

The Exam Simulator features an unlimited number of randomly-generated section quizzes as well as full-length exams, both in timed and untimed modes. New questions are added regularly to the Solomon Exam Prep Series 82 question database, so that you get the best experience possible in this fast-changing industry.

Studies have shown that self-testing is a powerful tool for learning. It just goes to show that the old saying is true: practice really does make perfect.

Begin practicing for your Series 82 exam with the Solomon Exam Prep Series 82 Online Exam Simulator today!

Exam Alert: FINRA recommends heightened supervision for complex products

On January 17, 2012, FINRA highlighted the need for firms to have adequate supervisory and compliance programs in place in order for registered representatives to recommend complex products. FINRA identified several characteristics that may cause a product to be considered “complex,” such as embedded derivatives or contingencies. The notice states that agents should determine suitability, consider the customer’s financial sophistication, discuss the products with the customer, and consider alternative investments that could meet the customer’s goals. The firm should also review the performance of the products and train the agents about the products. Continue reading

Source: FINRA Regulatory Notice 12-03

This alert applies to the Series 6, Series 7, Series 24, Series 26, Series 55, Series 62, Series 79, Series 82, Series 99, Series 63, Series 65, and Series 66.

Exam Alert: FINRA alters short interest reporting requirements

Effective December 15, 2011, FINRA has modified the rules for submitting short interest data. Specifically, when reporting such data for a security that is primarily listed on the BATS Exchange, the new exchange/market code “H” is used. Continue reading

Source: FINRA Regulatory Notice 11-55

This alert applies to the Series 24.

Exam Alert: FINRA modifies rules to protect certain documents from discovery

The SEC has approved a change to FINRA Rule 9251, effective December 2, 2011. This change to the rule explicitly protects from discovery documents that federal law prohibits FINRA from disclosing. Previously, FINRA’s Enforcement and Market Regulation Departments needed to seek a “good cause” determination to withhold the documents – this is no longer the case.

Source: FINRA Regulatory Notice 11-50

This alert applies to the Series 24, the Series 62, and the Series 82.