FINRA adopts new rules to tackle corporate misconduct | Goodwin

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REGULATORY DEVELOPMENTS

FINRA ADOPTS RULES TO ADDRESS COMPANIES WITH A SIGNIFICANT HISTORY OF MISCONDUCT

On September 28, FINRA adopted new rules to address companies with a significant history of misconduct. New Rule 4111 (Obligations of Restricted Firms) requires member firms identified as “Restricted Firms” to deposit eligible cash or securities into a restricted and restricted account; comply with specified conditions or restrictions; or comply with a combination of these obligations. The new Rule 9561 (Procedures for Regulating Activities under Rule 4111) and the amendments to Rule 9559 (Hearing Procedures for Expedited Proceedings under the Rule 9550 Series) establish a new expedited procedure for implement Rule 4111. The new rules and rule changes come into effect on January 1, 2022.

ORDER APPROVING A PROPOSED RULE CHANGE TO AMEND FINRA RULES 1240 (CONTINUING EDUCATION REQUIREMENTS) AND 1210 (REGISTRATION REQUIREMENTS)

On September 21, the SEC issued an order approving rule changes to amend Continuing Education Requirements (FINRA) Rule 1240. The amendment, among others, (1) requires that the regulatory element of FINRA’s continuing education program for registrants of FINRA members be tailored to each registration category and completed annually rather than all three. years, and (2) provides a means for individuals to maintain their qualifications after completion of enrollment through continuing education. The SEC has also approved amendments consistent with Rule 1210 (registration requirements) to change aspects of both the regulatory element (which focuses on regulatory requirements and industry standards) and the business element (which focuses on, among other things, securities products, services and strategies, company offerings, company policies and industry trends). FINRA will announce the implementation dates of the rule changes in a regulatory notice to be published no later than 90 days after SEC approval.

“The direct financial impact of a restricted deposit is likely to change the behavior of these member companies – and therefore protect investors. “
– FINRA

THE DIRECTIVE ON CROSS-BORDER DISTRIBUTION OF FUNDS – PRACTICAL ISSUES ARISING FROM IMPLEMENTATION IN THE EU

As regards the Directive on the cross-border distribution of funds (the Directive), certain practical problems arise for managers when they undertake pre-marketing activities in the European Union after the implementation of the Directive. Read the Customer Alert to learn more about the issues managers should keep in mind.

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