Effective July 11, 2011, FINRA will start a three-phase plan to track trades in all listed US stocks. Trades will be tracked using Continue reading
Effective July 11, 2011, FINRA will start a three-phase plan to track trades in all listed US stocks. Trades will be tracked using the Order Audit Trail System (OATS), which is currently used in recording and reporting trades on NASDAQ and in OTC equity securities. Relevant to Series 7, Series 24 and Series 62 exams.
http://www.finra.org/Industry/Regulation/Notices/2011/P122786
On February 1, 2011, FINRA Rule 4160, Verification of Assets, was put into effect. This rule states that if the following conditions are true: Continue reading
On February 1, 2011, FINRA Rule 4160, Verification of Assets, was put into effect. This rule states that if the following conditions are true:
1. A member keeps assets or records at a non-member institution,
2. FINRA has asked the non-member institution to verify what assets or records are being kept for the member, and
3. The non-member fails to promptly provide verification,
Then FINRA will notify the member that they are prohibited from keeping assets and records with the non-member.
http://www.finra.org/Industry/Regulation/Notices/2010/P122526
Effective October 7, 2011, broker-dealers must adhere to stricter know-your-customer and suitability standards than before. The new rules require Continue reading
Effective October 7, 2011, broker-dealers must adhere to stricter know-your-customer and suitability standards than before. The new rules require that consideration be given to a customer’s age, investment experience, time horizon, liquidity needs and risk tolerance, in addition to factors that were already required to be considered (other holdings, financial situation and needs, tax status and investment objectives). These new requirements are similar to the fiduciary standard used by investment advisers. Relevant to the Series 7, Series 66, Series 24, Series 62 and Series 79 exam.
http://www.finra.org/Industry/Regulation/Notices/2011/P122779
“Flipping” is when a customer sells a new issue into the secondary market at a profit shortly after the IPO. Underwriting managers may discourage this by Continue reading
“Flipping” is when a customer sells a new issue into the secondary market at a profit shortly after the IPO. Underwriting managers may discourage this by imposing penalty bids on brokers whose customers flip securities. Some firms have sought to independently recoup commissions paid to such brokers. Effective May 27, 2011, FINRA requires that flipping only be punished through penalty bids applied to the entire syndicate by the underwriting manager. Relevant to the Series 24, Series 62 and the Series 79 exams.
http://www.finra.org/Industry/Regulation/Notices/2010/P122491
Effective November 10, 2010, FINRA’s prior 90-second trade reporting requirement has been replaced with a Continue reading
Effective November 10, 2010, FINRA’s prior 90-second trade reporting requirement has been replaced with a 30-second trade reporting requirement. This applies to OTC trades made in equity securities during the hours that FINRA trade reporting facilities are open (generally 8 AM to 8 PM Eastern Time). This change also affects trade cancellations that were subject to 90-second reporting. Note that bonds are typically have a 15-minute trade reporting requirement.
Relevant to the Series 7, Series 62 and the Series 24 General Securities Principal exam.
http://www.finra.org/Industry/Regulation/Notices/2010/P121342
Effective May 27, 2011, during a new issue, the underwriting manager must report indications of interest and aggregate demand for the security to Continue reading
Effective May 27, 2011, during a new issue, the underwriting manager must report indications of interest and aggregate demand for the security to the issuer. After the settlement date of the new issue, a report of the final allocation of shares to institutional investors must be provided to the issuer, along with the aggregate sales to retail investors. This change was made to increase transparency in the book-building process. Relevant to FINRA Series 7, Series 24, Series 62 and the Series 79 Investment Banking Exam.
http://www.finra.org/Industry/Regulation/Notices/2010/P122491
“Spinning” is when a broker allocates IPO shares of a hot issue to favored customers, which the customers can then sell at a profit on the Continue reading
“Spinning” is when a broker allocates IPO shares of a hot issue to favored customers, which the customers can then sell at a profit on the secondary market. Effective May 27, 2011, FINRA has prohibited spinning. If it looks like there is a relationship between a customer and the broker-dealer, the broker-dealer cannot sell shares of new issues to that customer. Note that certain allocations are exempt from this rule.
http://www.finra.org/Industry/Regulation/Notices/2010/P122491
Effective May 27, 2011, FINRA member firms and associated persons may not offer or threaten to withhold shares of an allocation of a new issue in order to Continue reading
Effective May 27, 2011, FINRA member firms and associated persons may not offer or threaten to withhold shares of an allocation of a new issue in order to receive excessive compensation. This prohibited behavior is known as a quid pro quo allocation, where the member or associated person gives preferential allocation in exchange for a kick-back. Relevant to Series 24, Series 62 and Series 79.
http://www.finra.org/Industry/Regulation/Notices/2010/P122491
Effective December 15, if a seller does not accept a “buy-in” notice, it must send a signed, written rejection to the buyer no later than 6:00 PM Eastern Continue reading
Effective December 15, if a seller does not accept a “buy-in” notice, the seller must send a signed, written rejection to the buyer no later than 6:00 PM, Eastern Standard Time. If no rejection is sent, the notice is accepted. A “buy-in” notice is sent to a seller when the seller fails to deliver securities. It allows the buyer to repurchase the securities, with the seller making up any price difference. Relevant to: Series 7, Series 24, Series 62.
http://www.finra.org/Industry/Regulation/Notices/2010/P122271
Effective December 15, 2010, registered persons must provide prior written notice to their member firms before engaging in Continue reading
Effective December 15, 2010, registered persons must provide prior written notice to their member firms before engaging in outside business activities. The previous rule only required registered persons to provide prompt written notice. The new rule also requires that firms review the proposed activities. For registered persons who were engaged in outside business activities as of December 15, 2010, firms have until June 15, 2011 to review such activities. Relevant to: Series 7, Series 6, Series 24, Series 26, Series 79, Series 62.
http://www.finra.org/Industry/Regulation/Notices/2010/P122271
