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2018 FINRA Annual Conference: A Conversation With SEC Chairman Jay Clayton

May 30, 2018
Volume 22

  • Information Notice

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

Education and Compliance Programs

Petitions for candidacy are due July 9 for the annual meeting of FINRA firms to elect one Large Firm Governor, one Mid-Size Firm Governor, and one Small Firm Governor to the FINRA Board of Governors (FINRA Board). The election meeting will be held on or about Friday, August 17. A formal notice of the meeting, including the precise date, time and location, will be mailed to executive representatives on or about July 19, 2018. Eligible individuals who have not been nominated for election to the FINRA Board by the Nominating Committee may be included on the ballot for the election of governors by following the petition procedures set forth in the By-Laws and as further described in the Election Notice 5/25/18.

Tune in to the latest FINRA Unscripted podcast to hear from Susan Schroeder, FINRA’s Executive Vice President and Head of Enforcement. Last July, Susan led the effort to consolidate two distinct enforcement teams into one enforcement unit, largely due to feedback received as result of FINRA360, FINRA’s ongoing comprehensive self-evaluation and improvement initiative. Learn more about her work and the consolidation’s progress. Listen to the podcast.

2018 FINRA Annual Conference: A Conversation With SEC Chairman Jay Clayton

U.S. Securities and Exchange Commission (SEC) Chairman Jay Clayton joined FINRA President and CEO Robert Cook at the 2018 FINRA Annual Conference for a conversation about securities industry trends, including the SEC’s approach to fiduciary duty rules, the impact of cryptocurrencies and technology on markets and the future of the broker-dealer model. Watch the highlights video.


Enhancements to FINRA’s Disclosure Review Process Relating to Public Financial Records

FINRA is making enhancements to its disclosure review process that will permit firms to rely on FINRA’s verification process for purposes of compliance with the requirement to conduct a search of public records relating to bankruptcies, judgments and liens. Specifically, beginning on July 9, 2018, FINRA will conduct a public records search within 15 calendar days from the date of an applicant’s Form U4 (Uniform Application for Securities Industry Registration or Transfer) and provide member firms any information resulting from such a search if such information is different from what was reported in the applicant’s Form U4. These enhancements are likely to: (1) reduce the costs to firms associated with conducting these public records checks, which often involve finding and hiring a vendor; (2) result in more timely reporting of disclosure information to the benefit of regulators, investors and firms; and (3) result in a significant reduction of late disclosure fees related to judgments and liens. See Information Notice 5/18/18.

 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 has extended the comment period to June 22 for Regulatory Notice 18-10, which outlines the general retrospective rule review process and seeks responses to several questions related to firms’ experiences with this specific rule.
  • 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.

SEC Request for Comment

  • The SEC requests comment on FINRA’s proposal to amend FINRA Rules 12500 and 12501 of the Code of Arbitration Procedure for Customer Disputes (Customer Code) and FINRA Rules 13500 and 13501 of the Code of Arbitration Procedure for Industry Disputes (Industry Code and together, Codes), to charge a $100 per-arbitrator fee to parties who request cancellation of a prehearing conference within three business days before a scheduled prehearing conference. The proposed rule change would also amend FINRA Rules 12214(a) and 13214(a) of the Codes to create a $100 honorarium to pay each arbitrator scheduled to attend a prehearing conference that was cancelled within three business days of the prehearing conference. The comment period expires June 8, 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.

FINRA’s 2018 Risk Control Assessment (RCA) launched recently, when each firm's executive representative and their designated assistant received 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 FINRA identify and assess the integrity of the controls intended to manage those attendant risk exposures.

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


 Education and Compliance Programs

Register today for the 2018 Fixed Income Conference, which takes place September 13 in New York. The program focuses on current market impacts on fixed income, and how regulators and firms are responding. Discounted rates are available to the first 50 to register for in-person attendance through June 29.

FINRA is hosting a phone-in workshop and WebEx presentation on Thursday, June 14, 2018, from 4 p.m. – 5 p.m. ET, to preview the new TRACE Markup/Markdown Analysis Report and demonstrate its features. The report displays a firm's markup and markdown behavior compared to the industry and provides the underlying details used to calculate the markup or markdown. FINRA is introducing the new TRACE Markup/Markdown Analysis Report on the Report Center this summer.

To participate,
register on FINRA’s website. Dial-in and WebEx information will be provided to registrants in advance of the presentation.

Free on-demand recordings of available sessions from FINRA's 2018 Cybersecurity Conference are now available to member firms and CRCP graduates. Visit FINRA's website to view the recordings.

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, Atlanta 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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