Regulatory Notice 15-05

SEC Approves Consolidated FINRA Rule Regarding Background Checks on Registration Applicants

Effective Date of FINRA Rule 3110(e): July 1, 2015, Effective Date of FINRA Rule 3110.15: April 24, 2014, to December 1, 2015

Executive Summary

The SEC approved FINRA’s proposed rule change to adopt NASD Rule 3010(e) (Qualifications Investigated) relating to background checks on registration applicants as FINRA Rule 3110(e) (Responsibility of Member to Investigate Applicants for Registration)1 in the consolidated FINRA rulebook.2 FINRA Rule 3110(e) is based in part on substantially similar provisions in NASD Rule 3010(e) and Incorporated NYSE Rule 345.11 (Investigation and Records), and includes new provisions relating to the verification of information in the Form U4 (Uniform Application for Securities Industry Registration or Transfer). The SEC also approved FINRA Rule 3110.15 (Temporary Program to Address Underreported Form U4 Information), which establishes a temporary program that will issue a refund to members of Late Disclosure Fees assessed for the late filing of responses to Form U4 Question 14M, subject to specified conditions.4 FINRA Rule 3110(e) becomes effective on July 1, 2015. FINRA Rule 3110.15 became retroactively effective on April 24, 2014, and it will automatically sunset on December 1, 2015.5

The amended rule text is attached as Appendix A.

Questions regarding this Notice should be directed to Afshin Atabaki, Associate General Counsel, Office of General Counsel, at (202) 728-8071.

Technical questions regarding the temporary refund program under FINRA Rule 3110.15 should be directed to Mario DiTrapani, Vice President, CRD/Public Disclosure, at (240) 386-4796.