Board Approves Annual Financial Report, Enforcement Digital Transformation Initiative and Three Rulemaking Items
WASHINGTON – FINRA's Board of Governors met virtually on June 10 and 11. During the meeting, the Board approved three rulemaking items and approved the organization's Annual Financial Report, which FINRA issues each year to provide transparency regarding its finances. The 2019 report will be published in the coming weeks.
In addition, the Board approved a proposal to enhance FINRA Enforcement's technology platform. The three-year Enforcement Digital Transformation is designed to improve efficiencies in the case workflow process, reduce maintenance costs and deliver additional annual savings.
"The new Enforcement technology platform will replace one that is 13 years old and currently presents workflow challenges, which can slow down the process of bringing enforcement actions," said FINRA CEO Robert Cook. "The Enforcement Digital Transformation will lead to greater operational effectiveness within the Enforcement department and for other regulatory groups at FINRA, and—as an added benefit—reduced operating costs."
The Board continued its commitment to engaging with key stakeholders by welcoming SEC Commissioner Elad L. Roisman for a virtual lunch discussion. Topics included the SEC's Regulation Best Interest, prevention of elder fraud, and how FINRA and the SEC are coordinating with each other, the states and other financial regulators to foster ongoing dialogue and provide appropriate guidance during the COVID-19 pandemic.
The Board also issued a statement in support of the organization's determination to pursue its mission with a diverse and inclusive workforce; to expand its efforts to promote the financial literacy and capability of minority communities; and to work collaboratively with others to promote greater diversity and inclusion across the industry, so it can better represent and serve the needs of all investors. Through the statement, the Governors also expressed their commitment to continuing to increase the diversity of the FINRA Board.
The Board approved three rule proposals to be published by FINRA for comment or 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 Procedures to Address Cheating on Qualification Examinations – The Board approved the publication of a Regulatory Notice soliciting comment on a new expedited proceeding rule for failures by associated persons and non-associated persons to comply with the FINRA Qualification Examinations Rules of Conduct; corresponding amendments to the registration requirements rule (Rule 1210); and amendments to the eligibility proceedings rules for requests by sponsoring firms to associate, or continue associating, with persons who have been prohibited from taking FINRA qualification examinations.
Proposed Amendments to FINRA Corporate Financing Rules to Require Members to File Retail Communications Concerning Specified Private Placements – The Board approved filing with the SEC proposed amendments to FINRA Rules 5122 (Private Placements of Securities Issued by Members) and 5123 (Private Placements of Securities) to require firms to file retail communications concerning specified private placements.
Proposal Relating to TRACE Reporting of Delayed Treasury Spot and Portfolio Trades – The Board approved the publication of a Regulatory Notice soliciting comment on proposed amendments to the Trade Reporting and Compliance Engine (TRACE) Rules to require members to identify corporate bond trades that are priced off of a spread to a U.S. Treasury Security or that are part of a portfolio trade. The amendments are designed to provide investors with more contextual information when there are trades reported with prices away from the current market.
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.