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FINRA’s Continued Response to COVID-19

April 1, 2020
Volume 13


Upcoming Deadlines and Effective Dates
  • Extended Effective Date
  • FINRA Requests for Comment
  • SEC Request for Comment on FINRA Rules

Education and Compliance Programs

Working on the Front Lines of Investor Protection. There are over 600,000 registered brokers, and the overwhelming majority conduct themselves with the highest ethical standards and are a trusted source of valuable investment advice for their clients. Unfortunately, however, a small number of brokers engage in purposeful misconduct. FINRA released a blog post outlining how it works to quickly identify misconduct and bar bad actors from the industry.

FINRA is committed to providing guidance, updates and other information to help stakeholders stay informed about the latest COVID-19 developments. This week, FINRA:

  • Released a podcast on business continuity plans and regulatory relief with Chief Legal Officer Bob Colby and Head of Member Supervision Bari Havlik.
  • Compiled SEC guidance and resources relevant to member firms.
  • Continued to compile State “Shelter-in-Place” and “Stay-at-Home” Orders to aid member firms.
  • Issued a Cybersecurity Alert with measures firms may use to help strengthen their cybersecurity controls in areas where risks may increase in the current environment.

To discuss these changes in detail, and other coronavirus-related issues, senior FINRA leaders are hosting a Small Firm Conference Call tomorrow, April 2, at 4:30 p.m. Eastern Time. Space on the call is limited, so register today

FINRA will continue to consider additional relief or adjustments as appropriate. For all of FINRA’s latest COVID-19 updates and answers to frequently asked questions, visit FINRA’s website.

 Upcoming Deadlines and Effective Dates

FINRA Extends the Effective Date of Amendments Relating to Treasury Hedge Transactions

On April 1, 2020, FINRA extended the effective date of amendments adopted by SR-FINRA-2019-014 related to transactions in U.S. Treasury Securities executed to hedge certain primary market transactions. These amendments, originally scheduled to take effect on June 1, have been extended until August 3, 2020. For additional information, see Regulatory Notice 19-30.

FINRA Requests for Comment

FINRA’s Capital Acquisition Broker (CAB) rules provide a simplified rulebook for broker-dealers that engage only in limited capital advisory, corporate restructuring and private placement activities. FINRA is requesting comment on proposed amendments to the CAB rules, as described in Regulatory Notice 20-04, to make them more useful to CABs without reducing investor protection. The comment period has been extended to May 15, 2020.

FINRA is requesting comment on a proposal to implement the recommendations of the CE Council regarding enhancements to the continuing education requirements for securities industry professionals. The proposal, described in Regulatory Notice 20-05, would change the: (1) Regulatory Element to provide annual training, make the content more relevant, incorporate diverse instructional formats, publicize the learning topics in advance and enhance the related management systems; (2) Firm Element to expressly recognize other training requirements, improve the guidance and resources available to firms and establish a content catalog; and (3) Continuing Education Program to enable individuals who terminate their registrations the option of maintaining their qualification by completing continuing education. The comment period has been extended to May 31, 2020.

SEC Request for Comment on FINRA Rules

The SEC requests comment on FINRA’s proposed rule change to, among other things: (1) amend the FINRA and Capital Acquisition Broker (“CAB”) suitability rules to state that the rules do not apply to recommendations subject to Regulation Best Interest (“Reg BI”); and (2) conform the rules governing non-cash compensation to Reg BI’s limitations on sales contests, sales quotas, bonuses and non-cash compensation. The comment period expires April 15, 2020. See the Federal Register notice.


 Education and Compliance Programs

Registration is open for the 2020 Small Firm Conference. The event will be held on November 11–12 in Santa Monica, California, and will bring together FINRA staff and industry peers for in-depth discussions on small firms' practices. Register early to receive discounted registration rates!

Save the Date for these upcoming FINRA events:

  • FINRA Institute at Georgetown Certified Regulatory and Compliance Professional® Program – Week I | July 19–24, 2020 | Washington, DC
  • FINRA Institute at Georgetown Certified Regulatory and Compliance Professional® Program – Week II | November 15–20, 2020 | Washington, DC

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