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FINRA's 2018 RCA Launched This Week

May 16, 2018
Volume 20
disciplinary actions

Disciplinary Actions


Upcoming Deadlines and Effective Dates
  • FINRA Requests for Comment
  • SEC Requests for Comment

Education and Compliance Programs

In-person attendance for next week’s FINRA Annual Conference (May 21 – 23, 2018) is sold out. There is still time to register to participate via live online broadcast. This year’s event features more than 50 sessions, more than 150 speakers and over a dozen networking events. Register today to attend via live online broadcast.

Those who cannot attend or watch the entire conference online can still stream two sessions live—free of charge:

Click the session links at the times listed above to watch the sessions live.

FINRA's 2018 Risk Control Assessment (RCA) launched this week, at which time each firm's executive representative and their designated assistant will receive an email linking to their firm's unique RCA survey. The RCA is an important part of FINRA’s risk-based surveillance and examination programs. FINRA uses it to better understand the risks associated with the business activities in which individual member firms engage, the products and services they offer, and the kinds of clients and counterparties with which they deal. In addition, the RCA helps us identify and assess the integrity of the controls intended to manage those attendant risk exposures.

Firms are asked to complete the survey by Friday, June 8, 2018.


 Disciplinary Actions

FINRA publishes disciplinary actions to remind registered representatives and firms of specific conduct that violates FINRA rules and may result in disciplinary action. The following items were posted on FINRA’s website this week:

  • FINRA fined Industrial and Commercial Bank of China Financial Services LLC $5.3 million for systemic anti-money laundering compliance failures, including its failure to have a reasonable AML program in place to monitor and detect suspicious transactions, as well as other violations, including financial, recordkeeping and operational violations.
  • May 2018 Disciplinary Actions.

 Upcoming Deadlines and Effective Dates

FINRA Requests for Comment

FINRA has four open requests for comment:

  • Regulatory Notice 18-16 seeks comment on proposed rule amendments that would impose additional restrictions on member firms that employ brokers with a history of significant past misconduct. These brokers, while relatively small in number, may present heightened risk of harm to investors, and any misconduct by them also may undermine confidence in the securities markets as a whole. The rule proposals would strengthen the existing controls FINRA has applied to such brokers to further promote investor protection and market integrity. The new proposals are one part of FINRA’s initiatives to confront high-risk brokers. Comments are due June 29, 2018.
  • FINRA is conducting a retrospective review of Rule 3110 (Supervision), governing annual compliance meetings to assess its effectiveness and efficiency. Regulatory Notice 18-14 outlines the general retrospective rule review process and seeks responses to several questions related to firms’ experiences with this specific rule. Comments are due June 25, 2018.
  • FINRA seeks comment on proposed rule amendments that would revise the quantitative suitability obligation under FINRA Rule 2111 (Suitability) to more effectively address instances of excessive trading in customers’ accounts. The proposed rule amendments would remove the element of control that currently must be proved to demonstrate a violation, but would not change the obligations to prove that the transactions were recommended and that the level of trading was excessive and unsuitable in light of the customer’s investment profile. See Regulatory Notice 18-13 for more information. Comments are due June 19, 2018.
  • FINRA is conducting a retrospective review of the rule governing carrying agreements to assess its effectiveness and efficiency. Regulatory Notice 18-10 outlines the general retrospective rule review process and seeks responses to several questions related to firms’ experiences with this specific rule. Comments are due May 23, 2018.

SEC Requests for Comment

  • The SEC requests comment on FINRA’s proposal to adopt rules relating to the establishment of a second Trade Reporting Facility or ‘‘TRF’’ to be operated in conjunction with Nasdaq, Inc. The second FINRA/Nasdaq Trade Reporting Facility would provide FINRA members with another mechanism for reporting over-the-counter trades in NMS stocks and complying with FINRA’s requirements with respect to back-up trade reporting arrangements. Comments are due May 17, 2018. See the Federal Register notice.
  • The SEC requests comment on FINRA’s proposal to amend FINRA Rule 6433 (Minimum Quotation Size Requirements for OTC Equity Securities) to adopt as permanent the minimum quotation sizes for OTC equity securities currently operating on a pilot basis. The comment period expires May 29, 2018. See the Federal Register notice.

Special Election to Fill a FINRA Large Firm Governor Vacancy
FINRA is conducting a special meeting of large firm members to elect one individual to fill a vacant Large Firm Governor seat on the FINRA Board of Governors. Eligible individuals who have not been nominated by FINRA’s Nominating Committee may be included on the ballot for the election of governors by following the petition procedures described in Election Notice 4/20/18. Petitions for candidacy are due June 4, 2018.

 Education and Compliance Programs

Registration for the new FINRA Disclosure Reporting, Monitoring and Registration Conference is now open. This one-day conference is designed to bring together compliance, supervision, and registration staff from broker-dealers and third-party vendors to discuss regulatory reporting requirements and industry practices related to firm registrations, including FINRA’s Membership Application Program (MAP), individual registrations, customer complaints and disclosures. Discounted rates available for the first 50 to register through July 27.

District compliance events are designed for compliance and legal professionals at FINRA member firms, and offer an opportunity to hear about current regulatory issues while engaging with District Office staff. Review the list of upcoming events being held in the Chicago, Denver, Dallas, Woodbridge, New Orleans, Kansas City, Los Angeles and Boston districts.

FINRA has several Half-Day Compliance Boot Camps coming up soon.

Review the compliance calendar to see a complete list of events that may be in your area.

Also coming up:

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Regulatory Contacts
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