SFAB Email to Small Firms
March 13, 2012
Dear Small Firm Executive Representative:
Below is a summary of some FINRA initiatives and Regulatory Notices open for comment that we think will be of interest to you.
Risk Control Assessment. You recently received an email from FINRA with a link to a new voluntary survey that is designed to assess risk at your firm. Completing the survey should benefit members by providing FINRA with a better understanding of a firm's risk profile. The aim is to make the examination process more efficient by allowing FINRA to identify low-risk areas at your firm and to tailor exams accordingly. While the SFAB recognized the potential benefits of the project, we raised immediate concerns to FINRA when the survey was launched. We asked for better definition of terms, for guidance where products or services are not material to a firm's business, and assurance that the survey was not an attempt to entrap members whose responses were well-intentioned. FINRA responded promptly with what we believe are meaningful changes to the form. If you abandoned your first attempt to complete the survey, please give it another try. We also asked FINRA to seriously consider a pilot program with small firms should this exercise be repeated in the future.
SFAB Communications. Firms have told us they would like to hear from the SFAB directly. In response, several SFAB members hosted roundtables in order to hear your comments and concerns directly, and to update you on our activities. In addition, we will continue to email you twice a year to solicit your feedback on FINRA initiatives and rulemaking. Please note that many of us will be attending FINRA's 2012 Annual Conference, so please come to the lunch we are hosting or stop us in the hallway to share your thoughts. Remember that there is a session devoted exclusively to small firms on Monday, May 21 at 9 a.m.
Free Resources. Firms have also told us that while they appreciate FINRA training, it is difficult for many small firm executives to get away from the office for such training. Therefore, FINRA has committed to conducting six free webinars this year, three of which will be dedicated to small firm issues. In February, FINRA hosted a webinar—which included a small firm panelist—that provided guidance on branch office inspections and was viewed by over 1,200 firms. On April 18, FINRA will host a webinar on the implementation of the new FINRA suitability rule. Please feel free to let us know if there are any topics that you would recommend for future webinars.
Debt Research Analyst Conflicts of Interest. FINRA recently published Regulatory Notice 12-09 seeking comment on a new proposal that would apply to firms that generate debt research. The Notice solicits advice on whether to exempt from certain provisions of the rule firms that conduct limited principal trading or have a limited debt business. FINRA staff is also interested in what an appropriate metric should be for such an exemption. During our discussions with staff, it was clear that the rule would apply generally to any firm communication involving analysis of a debt security that could reasonably form the basis for an investment decision. Accordingly, please review the proposed rule carefully in light of the possible effect on your firm's communications. Comments are due by April 2, 2012.
BrokerCheck. FINRA recently published Regulatory Notice 12-10 seeking comment on potential changes to its BrokerCheck system. Dodd-Frank mandated the SEC to conduct a study on improvements that could be made to the system. The Notice seeks comment on suggestions SEC staff made in the study. Many in our industry believe BrokerCheck subjects registered representatives to more scrutiny than any other profession, including doctors, lawyers and accountants. This is your chance to voice those opinions; comments are due April 6, 2012.
If you have concerns or issues you would like the SFAB to consider, please let us know by sending a reply to this email. Our next meeting is March 29, 2012, so if you have a topic you wish to raise, please reply by March 22, 2012. FINRA staff maintains the email account and collates and organizes the emails for us. If you are uncomfortable with sending the email to the FINRA account, please send it directly to me or an SFAB member by clicking on one of our names. Please note, the SFAB cannot address FINRA examination or compliance issues that may be specific to your firm. Also, please limit your feedback to items concerning FINRA rules or issues.
Thank you for your support. We will also continue to email you twice a year to solicit suggestions and provide updates.
Chair, FINRA Small Firm Advisory Board
Small Firm Advisory Board Roster
Patricia S. Bartholomew
Craig-Hallum Capital Group LLC
Eric A. Bederman
Bernardi Securities, Inc.
Wulff, Hansen & Co.
San Francisco, CA
Tina B. Maloney
Winslow, Evans & Crocker, Inc.
Daniel W. Roberts
Roberts & Ryan Investments, Inc.
San Francisco, CA
Joseph R.V. Romano
Romano Brothers & Co.
David V. Shields
Wellington Shields & Co.
New York, NY
David M. Sobel
New York, NY
David W. Wiley III
Wiley Bros. – Aintree Capital, LLC