FINRA Extends Comment Periods for Rule Modernization Notices

Features

• FINRA Extends Comment Periods for Rule Modernization Notices 
  In response to feedback from FINRA members and advisory committees, FINRA has extended the comment period for each of the following Notices by 30 days: 
   
  • The comment period for Regulatory Notice 25-04 on modernizing FINRA rules now expires on June 11.
  • The comment period for Regulatory Notice 25-06 on promoting capital formation now expires on June 18.
  • The comment period for Regulatory Notice 25-07 on supporting modern firm workplaces now expires on July 14. 
     
• New Blog and Podcast on Managing Third-Party Vendor Risk 
  Greg Ruppert, FINRA’s Executive Vice President of Member Supervision, published a blog Tuesday detailing how FINRA is helping member firms mitigate the risks of third-party vendors. As the blog discusses, FINRA proactively shares information about third-party vendors with member firms in order to flag potential issues when they arise. Ruppert notes several instances when this targeted outreach has provided timely alerts and guidance to member firms. 
  
  FINRA is working to strengthen this intelligence sharing as part of FINRA Forward, a series of initiatives in support of members, markets and investors. Ruppert highlights these efforts in the latest episode of the FINRA Unscripted podcast, “Vendor Vigilance: Navigating Third-Party Risk.” He also offers insights on why firms are facing heightened challenges with third-party vendors as well as the emerging risks posed by fourth-party relationships. 
   
• FINRA Statement on Outside Activities Proposal 
  FINRA issued a statement Monday about FINRA’s outside activities proposal, which is detailed in Regulatory Notice 25-05. The proposed rule, published for comment on March 14, would streamline and reduce unnecessary burdens regarding existing requirements addressing outside activities of broker-dealers’ associated persons. FINRA’s statement affirms that, contrary to mischaracterizations made in certain media reports, the proposal 1. contains no new reporting and approval requirements, 2. makes clear that personal investments in non-securities are excluded from reporting and approval requirements, 3. does not impose on broker-dealers new obligations regarding outside unaffiliated investment adviser activities, and 4. eliminates broker-dealers’ obligations regarding activities conducted at an affiliate (e.g., an investment adviser, insurance or bank affiliate). FINRA encourages interested parties to read Regulatory Notice 25-05 and provide feedback based on its content. The comment period ends May 13. 
   
• Six Steps to Recover from Investor Fraud 
  In a recent Investor Insight, FINRA offers a checklist for victims of financial scams to reclaim power and obtain emotional assistance. The article, available here, emphasizes the importance of reporting the fraud immediately. Firms are welcome to share it and other FINRA Investor Insights with customers. 
   
• ICYMI: New Rate for Fees Paid Under Section 31 of Exchange Act 
  FINRA published an Information Notice on April 24 alerting member firms to a change the SEC made to the Section 31 fee rate applicable to specified securities transactions on the exchanges and in the over-the-counter markets. The fee will decrease from its current rate of $27.80 per million dollars in transactions to a new rate of $0.00 per million dollars in transactions. The assessment on security futures transactions will remain unchanged at $0.0042 for each round turn transaction. The change will take effect May 14.

• New Comment Periods for Modernization Notices: See the feature above for details of FINRA’s extension of comment periods for modernization notices.