Board Approves Rule Proposals, Reaffirms Financial Guiding Principles
WASHINGTON – FINRA’s Board of Governors met on Dec. 4-5 at FINRA’s offices in New York, where it approved two rule proposals, received several operational updates and reaffirmed FINRA’s Financial Guiding Principles.
As is customary for the last meeting of the year, the Board spent a significant portion of the meeting discussing FINRA’s finances and other long-term planning. The Board approved the self-regulatory organization’s 2020 proposed budget and reviewed its Financial Guiding Principles, which FINRA first implemented in January 2018.
“FINRA’s Financial Guiding Principles drive our long-term financial planning and how we manage our resources,” said FINRA CEO Robert Cook. “It is important to periodically take a fresh look at those principles to ensure they remain accurate, and I am pleased they were reaffirmed by the Board at our December meeting.”
“We have added a whole layer of transparency to how we conduct our business,” FINRA Board member and Chairman of FINRA’s Finance, Operations and Technology Committee, Joshua S. Levine, said of the Financial Guiding Principles in a Board Video Report recapping the meetings. “I think that has been one of the best parts of FINRA360.”
FINRA staff presented several operational updates, including the progress of the Examination and Risk Monitoring Program Transformation, and the Board heard a presentation from FINRA CAT—the Consolidated Audit Trail plan processor—on the progress of the project.
The Board approved two rule proposals to be filed with the Securities and Exchange Commission (SEC), where they will be published for public comment and must be approved by the SEC before becoming effective:
Proposed Rule Changes Related to Firms with a Significant History of Misconduct – The Board approved a proposed Restricted Firm Obligations Rule that would require member firms that are identified as Restricted Firms to maintain a deposit in a segregated account from which withdrawals would be restricted, adhere to specified conditions or restrictions, or comply with a combination of such obligations.
Proposed Amendments to FINRA’s Suitability and Non-Cash Compensation Rules to Align with SEC Regulation Best Interest – The Board approved proposed amendments to the rules governing suitability and non-cash compensation to address inconsistencies with SEC Regulation Best Interest and to mitigate potential confusion over which standards will apply with respect to recommendations to retail customers.
For general information about FINRA’s rulemaking process, see www.finra.org/rules-guidance/rulemaking-process. More information regarding the Board's operations, including the membership and responsibilities of its committees, is available at www.finra.org/governance.
FINRA is a not-for-profit organization dedicated to investor protection and market integrity. It regulates one critical part of the securities industry—brokerage firms doing business with the public in the United States. FINRA, overseen by the SEC, writes rules, examines for and enforces compliance with FINRA rules and federal securities laws, registers broker-dealer personnel and offers them education and training, and informs the investing public. In addition, FINRA provides surveillance and other regulatory services for equities and options markets, as well as trade reporting and other industry utilities. FINRA also administers a dispute resolution forum for investors and brokerage firms and their registered employees. For more information, visit www.finra.org.