Rule 4111 Compliance Tool Glossary

FINRA Rule 4111(b) requires the Department of Member Supervision (Department) to calculate annually a member firm’s "Preliminary Identification Metrics" to determine whether the firm meets the "Preliminary Criteria for Identification."¹ A key driver of that is whether a member firm’s Preliminary Identification Metrics meet quantitative, risk-based "Preliminary Identification Metrics Thresholds."² The date, each calendar year, as of which the Department calculates the Preliminary Identification Metrics to determine if the member firm meets the Preliminary Criteria for Identification is the "Evaluation Date."³ For more information, see Rule 4111 and Regulatory Notice 21-34.

The Rule 4111 Compliance Tool, which resides in the FINRA Gateway, provides reports of:

the Annual Calculation of whether the member firm met the Preliminary Criteria for Identification, including its Preliminary Identification Metrics, as of the Evaluation Date for a given year; and
Interim Calculations as of an Evaluation Date for that given year. The Interim Calculations are generated for informational purposes only; whether a member firm will meet the Preliminary Criteria for Identification as of the Evaluation Date in the Annual Calculation could change based on subsequent events.

Each year’s report of the Annual Calculation will be issued shortly after the Rule 4111 Annual Calculation is conducted for that year. Prior to each year’s report of the Annual Calculation, FINRA generally expects to issue three reports of Interim Calculations for that given year, at regular intervals.⁴

Access

To access the Rule 4111 Compliance Tool, each user requires an account for logging into FINRA Gateway, and must request the "Firm View Rule 4111 Compliance Tool" entitlement from their firm’s Super Account Administrator (SAA). The SAA grants entitlement for the tool in FINRA’s Account Management System, under the Registrations sub-section, in the CRD suite of entitlements. Each user at the firm who needs to access the Rule 4111 Compliance Tool must be granted access for the tool by their firm’s SAA.

The Rule 4111 Compliance Tool resides in the Reports section of the FINRA Gateway. Users who are not entitled to the tool will not see the tool.

Summary View Fields

Term

Description

Report Date

The “Report Date” field provides the date that FINRA issued the report of the Annual Calculation or Interim Calculation.

The Rule 4111 Compliance Tool will provide, as they are issued, reports of: (1) the Annual Calculations of whether the member firm met the Preliminary Criteria for Identification, including its Preliminary Identification Metrics, as of the Evaluation Date for a given year; and (2) Interim Calculations as of an Evaluation date for that given year.

Each year’s report of the Annual Calculation will be issued in July, shortly after the Rule 4111 annual calculation is conducted for that year. Prior to each year’s report of the Annual Calculation, FINRA expects to issue three reports of Interim Calculations for that given year. The first report of an Interim Calculation will be issued in June 2022; thereafter, reports of Interim Calculations will be issued three times a year in October, January and April.

The reports of Interim Calculations will be generated for informational purposes only; whether a firm will meet the Preliminary Criteria for Identification in the Annual Calculation could change based on subsequent events.

Evaluation Date

The “Evaluation Date” is the date, each calendar year, as of which the Department calculates the Preliminary Identification Metrics to determine if the member firm meets the Preliminary Criteria for Identification. The Evaluation Date will establish the date as of which all specified events that are reportable on the Uniform Registration Forms, or otherwise included in Rule 4111, would be included in the Annual Calculation of the Preliminary Criteria for Identification.

Meets Preliminary Criteria? Annual Calculation

The “Meets Preliminary Criteria? Annual Calculation” field is used only for the reports of Annual Calculations of whether the member firm met the Preliminary Criteria for Identification as of the Evaluation Date. The reports of Annual Calculations are issued in July.

“Yes” indicates that the member firm met the Preliminary Criteria for Identification as of the Evaluation Date.
“No” indicates that the member firm did not meet the Preliminary Criteria for Identification as of the Evaluation Date.
“N/A” means that this field is not applicable for the listed report.

Meets Preliminary Criteria? Interim Calculation

The “Meets Preliminary Criteria? Interim Calculation” field is only for the Interim Calculations as of an Evaluation Date. The reports of Interim Calculations will be generated for informational purposes only; whether a member firm will meet the Preliminary Criteria for Identification in the Annual Calculation could change based on subsequent events.

“Yes” indicates that, as of the Report Date for the Interim Calculation, the member firm is meeting the Preliminary Criteria for Identification as of the specified Evaluation Date.
“No” indicates that, as of the Report Date for the Interim Calculation, the member firm is not meeting the Preliminary Criteria for Identification as of the specified Evaluation Date.
“N/A” means that this field is not applicable for the listed report.

Firm Size Category

The number in the “Firm Size Category” field (a number between 1 and 7) reflects the member firm’s Firm-Size Category for purposes of the Rule 4111 Preliminary Identification Metrics Thresholds. There are Preliminary Identification Metrics Thresholds for seven Firm-Size Categories.⁵The seven Firm-Size Categories, which are set forth in Rule 4111(i)(11), are based on the number of “Registered Persons In-Scope”:⁶

Firm Size Category	Number of Registered Persons In-Scope in Firm Size category
1	1-4
2	5-9
3	10-19
4	20-50
5	51-150
6	151-499
7	500+

Metrics Calculations

The “Metrics Calculations” field shows the total number of Preliminary Identification Metrics calculated. Since there are six Preliminary Identification Metrics, this field will always be populated with the number 6. The user can use the field’s drop-down functionality to obtain additional details about the Preliminary Identification Metrics calculations.

Events

The “Events” field displays the sum of the Registered Person Adjudicated Events, Registered Person Pending Events, Registered Person Termination and Internal Review Events, Member Firm Adjudicated Events, Member Firm Pending Events, and Registered Persons Associated with Previously Expelled Firms that are counted in the member firm’s Preliminary Identification Metrics.⁷ The user can use the field’s drop-down functionality to obtain additional details about the Events.

Metrics Calculations Fields

Term

Description

Events Category

The “Events Category” field displays the events applicable to the Preliminary Identification Metrics as defined in Rule 4111. There are six Events Categories: ⁸

Expelled Firm Associations
Member Firm Adjudicated Events
Member Firm Pending Events
Registered Person Adjudicated Events
Registered Person Pending Events
Registered Person Termination/Internal Review Events

Thresholds

The “Thresholds” field displays the Preliminary Identification Metric Threshold for the applicable Preliminary Identification Metric. Pursuant to Rule 4111(i)(11), there are 42 Preliminary Identification Metrics Thresholds:

Preliminary Identification Metric Thresholds
	Thresholds for Registered Person Event Metrics:			Thresholds for Member Firm Event Metrics:		Threshold for Expelled Firm Association Metric:
Firm Size category:	Registered Person Adjudicated Event Metric:	Registered Person Pending Event Metric:	Registered Person Termination and Internal Review Event Metric:	Member Firm Adjudicated Event Metric:	Member Firm Pending Event Metric:	Expelled Firm Association Metric:
1	0.50	0.20	0.10	0.75	0.25	0.30
2	0.30	0.20	0.10	0.30	0.10	0.25
3	0.20	0.10	0.10	0.30	0.05	0.20
4	0.20	0.10	0.10	0.20	0.02	0.15
5	0.20	0.05	0.10	0.15	0.01	0.03
6	0.15	0.05	0.10	0.10	0.01	0.01
7	0.10	0.05	0.10	0.05	0.01	0.01

Firm’s Metrics

The “Firm’s Metrics” field shows the applicable Preliminary Identification Metric calculation, displayed as a numeric value. Pursuant to Rule 4111(i)(10), each Preliminary Identification Metric is computed as follows:

Preliminary Identification Metric	Computation
Registered Person Adjudicated Event Metric	Computed as the sum of Registered Person Adjudicated Events that reached a resolution during the Evaluation Period,⁹ across all Registered Persons In-Scope and divided by the number of Registered Persons In-Scope.
Registered Person Pending Event Metric	Computed as the sum of Registered Person Pending Events as of the Evaluation Date, across all Registered Persons In-Scope and divided by the number of Registered Persons In-Scope.
Registered Person Termination and Internal Review Event Metric	Computed as the sum of Registered Person Termination and Internal Review Events that reached a resolution during the Evaluation Period and pending internal reviews by a previous member as of the Evaluation Date, across all Registered Persons In-Scope and divided by the number of Registered Persons In-Scope.
Member Firm Adjudicated Event Metric	Computed as the sum of Member Firm Adjudicated Events that reached a resolution during the Evaluation Period, divided by the number of Registered Persons In-Scope.
Member Firm Pending Event Metric	Computed as the sum of Member Firm Pending Events as of the Evaluation Date, divided by the number of Registered Persons In-Scope.
Expelled Firm Association Metric	Computed as the sum of Registered Persons Associated with Previously Expelled Firms, divided by the number of Registered Persons In-Scope.

Meets or Exceeds Threshold

The “Meets or Exceeds Threshold” field (which displays as either “yes” or “no”) indicates whether the applicable Preliminary Identification Metric is equal to or more than the corresponding Preliminary Identification Metric Threshold.

Number of Events (Numerator)

The “Number of Events” field displays the number of “Registered Person and Member Firm Events”¹⁰ per event category.

Number of Registered Persons In-Scope (Denominator)

The “Number of Registered Representatives” field displays the total number of Registered Persons In-Scope.¹¹

Events Fields

Term	Description
Report Date	The "Report Date" field provides the date that FINRA issued the report of the Annual Calculation or Interim Calculation. The Rule 4111 Compliance Tool will provide, as they are issued, reports of: (1) the Annual Calculations of whether the member firm met the Preliminary Criteria for Identification, including its Preliminary Identification Metrics, as of the Evaluation Date for a given year; and (2) Interim Calculations as of an Evaluation date for that given year. Each year’s report of the Annual Calculation will be issued in July, shortly after the Rule 4111 annual calculation is conducted for that year. Prior to each year’s report of the Annual Calculation, FINRA expects to issue three reports of Interim Calculations for that given year. The first report of an Interim Calculation will be issued in June 2022; thereafter, reports of Interim Calculations will be issued three times a year in October, January and April. The reports of Interim Calculations will be generated for informational purposes only; whether a firm will meet the Preliminary Criteria for Identification in the Annual Calculation could change based on subsequent events.
Evaluation Date	The “Evaluation Date” is the date, each calendar year, as of which the Department calculates the Preliminary Identification Metrics to determine if the member firm meets the Preliminary Criteria for Identification. The Evaluation Date will establish the date as of which all specified events that are reportable on the Uniform Registration Forms, or otherwise included in Rule 4111, would be included in the annual calculation of the Preliminary Criteria for Identification.
Firm CRD Number	Broker-Dealer CRD # for the firm responsible for the submission.
Registered Person or Registered Firm Event Category	The categorization of the event: Expelled Firm Associations Member Firm Adjudicated Events Member Firm Pending Events Registered Person Adjudicated Events Registered Person Pending Events Registered Person Termination/Internal Review Events
Individual CRD Number	The Registered Representative’s individual CRD unique identifier
Individual First Name	Registered Representative first name on record
Individual Last Name	Registered Representative last name on record
Disclosure Type	The disclosure categories reported: Customer Complaint Criminal Regulatory Action Civil Judicial Action Investigation Internal Review Termination
Disclosure Occurrence Number or Firm Arbitration Case Number	The unique identifier of the event, as tracked in FINRA systems.

Export Details Data

The Export button for the 4111 Compliance Tool allows users to extract data from the tool. Choose to download to a single file or multiple files according to how much data you need to download at one time.

Information about the Export tool is available HERE.

Users should refer to the description of the terms above that describe the content and structure of the download files.

Endnotes

¹Rule 4111(i)(10) (definition of “Preliminary Identification Metrics”); Rule 4111(i)(9) (definition of “Preliminary Criteria for Identification”).

²Rule 4111(i)(11) (definition of “Preliminary Identification Metrics Thresholds”).

³Rule 4111(i)(5) (definition of “Evaluation Date”).

⁴Prior to the Annual Calculation of whether the member firm met the Preliminary Criteria for Identification as of the June 1, 2022 Evaluation Date, however, FINRA will issue only one report of an Interim Calculation.

⁵Rule 4111(i)(11).

⁶Rule 4111(i)(13) (definition of “Registered Persons In-Scope”).

⁷Rule 4111(i)(4) (definition of the “Disclosure Event and Expelled Firm Association Categories”); Rule 4111(i)(10) (definition of “Preliminary Identification Metrics”).

⁸Rule 4111(i)(4).

⁹Rule 4111(i)(6) (definition of “Evaluation Period”).

¹⁰Rule 4111(i)(12) (definition of “Registered Person and Member Firm Events”).

¹¹Rule 4111(i)(13).