FINRA Rule 4530(a) requires firms to promptly report specified events to FINRA no later than 30 calendar days after the firm knows or should have known of their existence.
Prospective FINRA member firms must seek approval for new FINRA membership through the submission of a New Membership Application (NMA or Form NMA) in accordance with FINRA Rule 1013 (New Member Application and Interview). Existing FINRA member firms that are contemplating a material change in ownership, control, or business operations must submit a Continuing Membership Application (CMA or Form CMA) in accordance with FINRA Rule 1017 (Application for Approval of Change in Ownership, Control, or Business Operations). Both types of applications are reviewed by FINRA’s Membership Application Program (MAP) Group.
FINRA Rule 4311(h)(2) replaced NASD Rule 3230(c)(3) in August, 2011. Rule 4311(h)(2) requires that each year, by no later than July 1, each clearing/carrying member firm notify in writing the introducing/correspondent member firm's chief executive and compliance officers of the reports offered to the introducing member firm pursuant to 4311(h)(1) and the reports requested by or supplied to the introducing member firm as of such date.
In November 2000, the SEC adopted Exchange Act Rule 11Ac1-5. Rule 11Ac1-5 is aimed at improving public disclosure of order execution quality. Under Rule 11Ac1-5, the SEC requires market centers that trade national market system securities to make monthly electronic reports.
Form CMA is organized by 14 standards for admission as set forth under Rule 1014(a) and specifies the documents and information required to support each standard. The items listed in this checklist are also organized by standard and focus on the standards and their related documentation and information that an applicant may inadvertently overlook when submitting the application. Firms should treat this checklist as a starting point for preparing Form CMA. Firms are advised to review the rules applicable to a CMA, including Rules 1014 and 1017, together with Form CMA. During the course of the review process, FINRA may request additional documents and information as necessary to render a decision on the application.
Proposed Rule Change to Adopt FINRA Rule 2273 (Educational Communication Related to Recruitment Practices and Account Transfers
Suitability obligations are critical to ensuring investor protection and promoting fair dealings with customers and ethical sales practices. FINRA Rule 2111 governs general suitability obligations, while certain securities are covered under other rules that may contain additional requirements.
FINRA Rule 2111 requires that a firm or associated person have a reasonable basis to believe a recommended transaction or investment strategy involving a security or securities is suitable for the customer. This is based on the information obtained through reasonable diligence of the firm or associated person to ascertain the customer’s investment profile.
The rule states that the customer’s investment profile “includes, but is not limited to, the customer’s age, other investments, financial situation and needs, tax status, investment objectives, investment experience, investment time horizon, liquidity needs [and] risk tolerance,” among other information. A broker’s “recommendation,” which is based on the facts and circumstances of a particular case, is the triggering event for application of the rule.
Brokers must have a firm understanding of both the product and the customer, according to Rule 2111. The lack of such an understanding itself violates the suitability rule.
Effective December 1, 2014, FINRA Rule 3170, Tape Recording of Registered Persons by Certain Firms, commonly referred to as the "Taping Rule," was adopted into the Consolidated FINRA Rulebook, replacing NASD Rule 3010(b)(2). The Taping Rule provisions first became effective August 17, 1998, when the Securities and Exchange Commission approved an amendment to NASD Rule 3010 to require members to establish, enforce and maintain special written supervisory procedures, including the tape recording of conversations, when they have hired more than a specified percentage of registered persons from certain firms that have been expelled or that have had their broker/dealer registrations revoked for violations of sales practice rules ("disciplined firms").
A member firm may include related performance information in institutional communications concerning Section 3(c)(1) Funds, subject to the stated conditions discussed in the letter.
The Anti-Money Laundering (AML) section of the 2021 Report on FINRA’s Risk Monitoring and Examination Activities (the Report) informs member firms’ compliance programs by providing annual insights from FINRA’s ongoing regulatory operations, including (1) relevant regulatory obligations and related considerations, (2) exam findings and effective practices, and (3) additional resources.
