FINRA Regulatory Notice 21-41 FINRA Amends Rules 1210 and 1240 to Enhance the Continuing Education Program for Securities Industry Professionals
FINRA has adopted important changes to its continuing education (CE) and registration rules to train registered persons more effectively while accommodating registered persons, particularly women and underrepresented minorities, whose personal circumstances take them away from the industry for a time. The changes to Rules 1210 and 1240: provide eligible individuals who terminate any of their representative or principal registration categories the option of maintaining their qualification for any terminated registration categories by completing annual CE through a new program, the Maintaining Qualifications Program (MQP); require registered persons to complete CE Regulatory Element annually for each representative or principal registration category that they hold; and expressly allow firms to consider other required training toward satisfying an individual’s annual CE Firm Element and extend the Firm Element requirement to all registered persons.
FINRA Regulatory Notice 21-40 FINRA Requests Comment on Amendments to Rule 11880 Shortening the Settlement of Syndicate Account
FINRA is soliciting comment on a proposal to amend FINRA Uniform Practice Code Rule 11880 (Settlement of Syndicate Accounts). The proposed amendments would reduce the maximum time for the final settlement of syndicate accounts in a public offering of corporate debt securities from 90 days to 30 days following the syndicate settlement date.
The MSRB filed a proposed rule change with the SEC to further extend additional regulatory relief on a temporary basis to brokers, dealers and municipal securities dealers in light of the operational challenges that persist due to the sustained coronavirus pandemic.
The Financial Crimes Enforcement Network (FinCEN) has issued the first government-wide priorities for anti-money laundering and countering the financing of terrorism policy, which was mandated by the Anti-Money Laundering Act of 2020 (AML Act). FinCEN also issued a statement to provide covered non-bank financial institutions (NBFIs), including broker-dealers, with guidance on how to approach the AML/CFT Priorities.
MSRB Approval Notice 2021-13 SEC Approves Amendments to Rules G-10 and G-48 Clarifying Notification Requirements for Dealers
On October 5, 2021, the Municipal Securities Rulemaking Board (MSRB) received approval from the U.S. Securities and Exchange Commission (SEC) for a rule change consisting of amendments to Rule G-10, on investor and municipal advisory client education and protection, clarifying and aligning the requirements for brokers, dealers and municipal securities dealers (collectively, “dealers”) to provide required notifications under the rule directly to those customers for whom a purchase or sale of a municipal security was effected in the past year and to each customer who holds a municipal securities position. The SEC also approved an accompanying amendment to Rule G-48, on transactions with sophisticated municipal market professionals (SMMPs), allowing dealers to conditionally excluded SMMPs from the requirements under Rule G-10(a). The rules become effective on October 12, 2021.
FINRA requests comment on a proposal to require members to publish quarterly order routing disclosure reports for held orders in OTC Equity Securities. The proposed new quarterly reports would be similar to those required for NMS stocks under the Securities and Exchange Commission’s (SEC) Rule 606(a) of Regulation NMS, with certain modifications reflecting the different structure of the OTC market. FINRA also requests input on possible steps to further facilitate investor access and understanding of current order routing disclosures for NMS securities.
NASAA Model Rule - Notice of Request for Public Comment Regarding Unpaid Arbitration Awards Model Rules
The Broker-Dealer Market and Regulatory Policy and Review Project Group, the Broker-Dealer Arbitration Project Group, and the Investment Adviser Regulatory Policy and Review Project Group (the “Project Groups”) of the North American Securities Administrators Association, Inc. (“NASAA”) are seeking public comment on proposed model rules (the “Model Rules”) to provide member jurisdictions with an additional tool to address unpaid Financial Industry Regulatory Authority (“FINRA”) arbitration awards by broker-dealers, agents, investment advisers, and investment adviser representatives. Ultimately, the Model Rules will serve as bases for enforcement actions related to unpaid awards and allow member jurisdictions to prevent the registration of firms and individuals, whether as broker-dealers, agents, investment advisers, or investment adviser representatives, if the firm or individual has outstanding FINRA arbitration awards or other regulatory obligations.
MSRB Request for Comment 2021-12 - Draft Compliance Resources for Dealers and Municipal Advisors Concerning New Issue Pricing
The Municipal Securities Rulemaking Board (MSRB) is requesting comment on draft companion compliance resources for brokers, dealers, and municipal securities dealers (collectively, “dealers”) and municipal advisors (together with dealers, “regulated entities”). The goal of the compliance resources is to enhance understanding regarding the existing regulatory standards applicable to regulated entities’ supervision of conduct when pricing a new issuance of municipal securities. The purpose of this notice is to seek information and insight from commenters to further inform the MSRB’s development of the attached drafts prior to any final publication.
FINRA Regulatory Notice 21-34 FINRA Adopts Rules to Address Firms with a Significant History of Misconduct
FINRA has adopted new rules to address firms with a significant history of misconduct. New Rule 4111 (Restricted Firm Obligations) requires member firms that are identified as “Restricted Firms” to deposit cash or qualified securities in a segregated, restricted account; adhere to specified conditions or restrictions; or comply with a combination of such obligations. New Rule 9561 (Procedures for Regulating Activities Under Rule 4111) and amendments to Rule 9559 (Hearing Procedures for Expedited Proceedings Under the Rule 9550 Series) establish a new expedited proceeding to implement Rule 4111.
Order Approving a Proposed Rule Change to Amend FINRA Rules 1210 (Registration Requirements) and 1240 (Continuing Education Requirements)
On June 3, 2021, FINRA filed with the SEC a proposed rule change to amend FINRA Rules 1240 (Continuing Education Requirements) and 1210 (Registration Requirements) to, among other things, require that the Regulatory Element of FINRA’s continuing education program for registered persons of FINRA members (“CE Program”) be tailored to each registration category and completed annually rather than every three years and provide a way for individuals to maintain their qualifications following the termination of registration through continuing education.
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