Compliance and Regulatory Alerts - 04-13-18

Alert: FINRA Solicits Comments on Proposed Outside Business Activities Rule

Comments must be submitted by April 27, 2018 on a FINRA proposal to consolidate rules on outside business activities of registered persons. Specifically, FINRA is proposing a consolidation of FINRA Rule 3270 ("Outside Business Activities of Registered Persons") and FINRA Rule 3280 ("Private Securities Transactions of an Associated Person"). The proposal contains a number of amendments intended “to reduce unnecessary burdens while strengthening investor protections.”

The proposed new rule would (i) require registered persons to provide prior written notice of outside activities to firms that employ them, (ii) reduce certain firm obligations regarding risk assessments in order to focus firms on activities that may raise investor protection concerns, (iii) eliminate supervisory and recordkeeping obligations for many specific outside activities (including unaffiliated third party advisory activities), and (iv) hold a member firm responsible for approved activities that are dependent on a registered person's association with the member.

FINRA is seeking comment on any unaddressed economic effects of the proposal including on the application of the proposed rule to registered persons, the effect on members' obligation to conduct risk assessments and the removal of supervisory obligations on outside activities.

Click here to read comment letters submitted thus far.

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For assistance with your existing policy and procedures, including supervisory programs and activities, please contact Bates Compliance Solutions at BCS@batesgroup.com.

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