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SEC Provides Temporary Exemptive Relief from Fingerprinting Requirements for, Among Others, Members and All of Their Associated Persons; FINRA Provides Additional Temporary Extension of Time for Submission of Fingerprint Information for Registered Persons

Updated On March 20, 2020, the Securities and Exchange Commission (the Commission) issued an order that, among other things, provides a temporary exemption until May 30, 2020 from the fingerprinting requirements of Securities Exchange Act Rule 17f-2 for FINRA members (the “March 20 Order”). On May 27, 2020, the Commission issued an order extending the temporary exemption until June 30, 2020. On June 26, 2020, the Commission issued an order extending the temporary exemption until the date to be specified in a public notice from Commission staff specifying the date on which the temporary exemption will terminate (the “Termination Date”). The Termination Date shall be at least two weeks from the date of the Commission staff public notice.

As a condition of the relief, the Commission’s March 20 Order requires written notification to the Commission by May 30, 2020, that a person will rely on the exemption. FINRA provided that notification to the Commission on March 24, 2020 on behalf of all of its members, their employees and associated persons. The Commission’s orders on May 27, 2020 and June 26, 2020, provide that a registrant or other person who is relying on the March 20 Order and has already provided a written notification to the Commission may rely on the extension without submitting another written notification. With respect to an individual seeking registration pursuant to the submission of a Form U4, a FINRA member firm seeking to avail itself of this temporary exemptive relief for registered persons must comply with FINRA’s guidance with respect to FINRA Rule 1010, which is set forth below. Accordingly, any FINRA members, their employees and associated persons relying on the Commission’s March 20 Order and FINRA’s notification to the Commission may continue to do so.

A FINRA member firm seeking to avail itself of this temporary exemptive relief must comply with the recordkeeping requirements set out in the guidance below. Among other things, member firms relying on the SEC’s exemptive relief must maintain a record of those persons relying on the exemptive relief, and why, in good faith, it is unable to comply the fingerprinting requirements for such persons.

Updated June 29, 2020

Temporary Extension of Time for Submission of Fingerprint Information for Persons Seeking Registration

Q. FINRA Rule 1010(d) requires members to submit fingerprint information for an individual applicant no later than 30 days after FINRA receives the applicant’s Form U4. In the interim, the individual’s registration may be deemed effective pending receipt of the fingerprint information. If the information is not submitted within 30 days, the individual’s registration is deemed inactive and the individual must immediately cease performing any registered activities. Due to the limitations and restrictions imposed as a result of the recent outbreak of coronavirus disease (COVID-19), our firm is unable to submit fingerprint information for applicants within the 30-day period under Rule 1010(d). Is FINRA considering extending the 30-day period to address this issue? Updated

A. Yes. Due to the COVID-19 outbreak, the SEC issued the March 20 Order providing temporary relief from the fingerprinting requirements of Section 17(f)(2) of the Exchange Act and SEA Rule 17f-2 for the period of March 16, 2020 until May 30, 2020. On May 27, 2020, the Commission issued an order extending the temporary relief from the fingerprinting requirements of Section 17(f)(2) of the Exchange Act and SEA Rule 17f-2 for the period of March 16, 2020 until June 30, 2020. On June 26, 2020, the Commission issued an order extending the temporary exemption until the date to be specified in a public notice from Commission staff specifying the Termination Date. (Please see the statement above for additional information on the Commission’s May 27 and June 26 orders and FINRA’s notification to the Commission.)  As noted above, member firms relying on the SEC’s exemptive relief must maintain a record of those applicants relying on the exemptive relief, and why, in good faith, it is unable to comply the fingerprinting requirements for such applicants.  

In addition, FINRA Rule 1010(d) authorizes FINRA to extend the 30-day period for submitting fingerprint information upon application and a showing of good cause. Given the Commission’s orders, and the authority in Rule 1010, FINRA is temporarily extending the time period for submitting fingerprint information under Rule 1010(d). Specifically, members that submitted, or will submit, an applicant’s initial or transfer Form U4 between February 15, 2020 and the Termination Date, will have until 30 days after the Termination Date to submit the necessary fingerprint information. 

Updated June 29, 2020

Temporary Exemptive Relief for Submission of Fingerprint Information for Associated Persons Required to be Fingerprinted but Not Seeking Registration

Q. Will non-registered associated persons who are required to be fingerprinted (NRFs) also receive additional time to submit their fingerprint information?  Updated

A. Yes. Those individuals are subject to the SEC orders providing a temporary exemption from the fingerprinting requirements of Section 17(f)(2) of the Exchange Act and SEA Rule 17f-2 thereunder until the Termination Date. As a condition of the relief, the Commission’s March 20 Order requires written notification to the Commission by May 30, 2020, that a person will rely on the exemption. FINRA provided that notification to the Commission on March 24, 2020 on behalf of all of its members and their associated persons, and FINRA supplemented its original notification to the Commission on April 9, 2020 to include NRFs. The Commission’s orders on May 27, 2020 and June 26, 2020, provide that a registrant or other person who is relying on the March 20 Order and has already provided a written notification to the Commission may rely on the extension without submitting another written notification. Accordingly, any FINRA members, their employees and associated persons, including NRFs, relying on the Commission’s March 20 Order and FINRA’s notifications to the Commission may continue to do so. As noted above, member firms relying on the SEC’s exemptive relief must maintain a record of those associated persons relying on the SEC’s exemptive relief, and why, in good faith, it is unable to comply the fingerprinting requirements for its NRFs. Such record must contain the hire date, and if applicable, the termination date of those NRFs.

Updated June 29, 2020