Frequently Asked Questions

Note: FINRA Rule1 3130 (Annual Certification of Compliance and Supervisory Processes) replaces NASD Rule 3013 and the corresponding provisions in Incorporated NYSE Rule 342.30 and related NYSE Rule Interpretations (effective December 15, 2008). See Regulatory Notice 08-57 and SR-FINRA-2008-030 for additional information.

 

Annual Certification of Compliance and Supervisory Process

 

Q: Can a firm have more than one CEO execute the FINRA Rule 3130 certification?

A. A firm may designate a co-CEO (for a maximum of two CEOs) solely for the purposes of complying with Rule 3130. However, co-CEOs may not divide up the requirements of the Rule; rather, each of the two CEOs is required to individually discharge all of the obligations set forth in Rule 3130, each is responsible for the representations in the certification as if they were the member's only CEO, and the signature of each co-CEO is expected to appear on the same single annual certification.

 

Q: Can a firm have more than one CCO for purposes of complying with Rule 3130?

A. A firm may designate multiple CCOs on Schedule A of Form BD, provided that:

 

(1) each designated CCO is a principal;

 

(2) the firm precisely defines and documents the areas of primary compliance responsibility assigned to each designated CCO and makes specific provisions for which of the designated CCOs has primary compliance responsibility in areas that can reasonably be expected to overlap;

 

(3) each designated CCO satisfies all of the requirements of Rule 3013 and IM-3013 with respect to his or her defined area of primary compliance responsibility as if that individual was the firm's only CCO; and

 

(4) collectively, the designated CCOs have the responsibilities and expertise that enable them to consult with the CEO on the totality of the subject matters required to be addressed in the certification by the CEO under Rule 3130.

 

Q: What needs to be done before the Rule 3130 certification can be completed?

A.   (1) Create a report detailing the process the firm has in place to establish, maintain, review, test and modify its written compliance policies and written supervisory procedures.

 

(2) The firm's CEO(s) (or equivalent officer(s)), CCO(s) and any other officers the member firm deems necessary to make the certification, must review the Rule 3130 report.

 

(3) The CEOs(s) (or equivalent officer(s)) must meet with the CCO(s) during the proceeding year to:

(a) Discuss and review the matters that are the subject of the certification;
(b) Discuss and review the member firm's compliance efforts to date; and

(c) Identify and address significant compliance problems and plans for emerging business areas.

 

Q: Does the board of directors and audit committee have to review the Rule 3130 report prior the completion of the Rule 3130 certification?

A. No. Rule 3130 does not require the board of directors or audit committee to review or consider the report as a condition to the CEO(s) executing the Rule 3130 certification. The final report must be submitted to the firm's board of directors and audit committee (or equivalent bodies) at the earlier of their next scheduled meeting or within 45 days of the date of execution of the certification.

 

Q: To whom does a firm submit the Rule 3130 report if it does not have a board of directors or audit committee?

A. If a firm does not have a board of directors or audit committee, the firm would submit the Rule 3130 report to the firm's equivalent bodies, such as a managing member, management committee, general partner, board or managers, advisory board, financial standards committee, etc. If a firm does not have a governing body or audit committee or equivalent, the report can be shared with the firm's majority shareholder or shareholders.

 

Q: When must a new member firm execute its first Rule 3130 certification?

A. The first certification must be executed no later than the first anniversary of becoming an FINRA member and then annually thereafter.

 

 

1 The current FINRA rulebook includes (1) FINRA Rules, (2) NASD Rules and (3) rules incorporated from NYSE (Incorporated NYSE Rules).While the NASD Rules generally apply to all FINRA member firms, the Incorporated NYSE Rules apply only to those members of FINRA that are also members of the NYSE (Dual Members). The FINRA Rules apply to all FINRA member firms, unless such rules have a more limited application by their terms. For more information about the rulebook consolidation process, see Information Notice 03/12/08.