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A Few Minutes With FINRA: Understanding the Securities Industry Essentials (SIE) Exam

June 6, 2018
Volume 23

  • Information Notice

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

Education and Compliance Programs

Tune in to the latest FINRA Unscripted podcasts to hear FINRA leaders review existing and emerging regulatory topics that impact the broker-dealer industry, as well as other insights into the operations of FINRA. 

Haime Workie and Kavita Jain, in FINRA’s Office of Emerging Regulatory Issues (ERI), examine the role of ERI in forecasting the market. From volatility to tax reform, learn what these FINRA experts think about the future. Listen to the podcast.

Susan Schroeder, FINRA’s Executive Vice President and Head of Enforcement, has been leading 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.

A Few Minutes With FINRA: Understanding the Securities Industry Essentials (SIE) Exam

In the latest episode of A Few Minutes With FINRA, Chip Jones interviews John Kalohn and Joe McDonald, who discuss FINRA’s exam restructuring initiative, which includes the new Securities Industry Essentials (SIE) exam for prospective securities industry professionals, available starting October 1, 2018. They explain what the SIE exam covers, how to enroll and how the new exam affects member firms. They also explain why FINRA decided to restructure “rep-level qualification exams.” Watch the 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.

Information Requests Notifications Update

Based on feedback from member firms, FINRA will be making a change to the Request Manager application to improve the targeting of request notifications. This change is expected to be implemented by mid-July 2018. The firm’s Regulatory Inquiries contact, as reported in the FINRA Contact System (FCS), will be included on every request sent to the firm (except for the request types listed below). As a reminder, firms are required to provide a Regulatory Inquiries contact in FCS.

The Regulatory Inquiries contact will not be included on the following request types:

  • AEP Stock Record and Allocations
  • Advertising Investigative Request
  • SEC Bluesheet Request
  • FINRA Bluesheet Request
  • Regulatory Coordinator Request

The goal of this new feature is to allow Request Manager to leverage the Regulatory Inquiries contact information and thereby minimize requests that are unnecessarily targeted to other roles at the firm.

For questions please send emails to
[email protected].


UPC Advisories
FINRA posted two UPC Advisories in the past week:

  • UPC# 022-18, Southeastern Grocers, LLC.
  • UPC # 021-18 Enumeral Biomedical Holdings, Inc.

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.

The 2018 Risk Control Assessment (RCA) survey deadline has been extended to Friday, June 22. The RCA survey 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.

Each firm’s executive representative and designated assistant was emailed a link to his or her firm’s unique RCA survey last month, with subsequent reminder emails over the past several weeks.

 Education and Compliance Programs

Register today for the 2018 Fixed Income Conference, which will be held September 13 in New York. The conference focuses on current market impacts on fixed income, and how regulators and firms are responding.

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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Regulatory Contacts
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Firms wishing to change the name or email address of their executive representative or designated assistant should do so through the FINRA Contact System (FCS). See for further information. Requests from executive representatives to be removed from this email notification list cannot be honored.

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