Recently, on February 14, 2013, Richard Ketchum, Chief Executive of the Financial Industry Regulatory Authority, Inc. (“FINRA”), sent FINRA member firms an e-mail stating that the FINRA board has approved issuing a revised proposal regarding membership rules. Originally, FINRA sent member firms a proposal of various rule changes regarding FINRA membership in 2010. Both the Securities Industry and Financial Markets Association (“SIFMA”) and the Financial Services Institute Inc. (“FSI”) wanted FINRA to amend the original proposed rule changes, as they thought it granted FINRA too much broad authority. Indeed, after receiving the initial proposal in March 2010, FSI provided FINRA with a comment letter which stated that the rule proposal would, “provide FINRA with excessively broad authority to request documents and information from firms, impose vague standards of review and . . . extend FIRNA’s jurisdiction well beyond its traditional bounds.” The revised proposal of rule changes will address regulatory issues identified by FINRA, and will codify existing interpretations of various membership rules. Specifically, the proposed rules regard providing FINRA with advanced notice of: new products and services, personnel expansion, transactions involving more than 10% of a firm’s ownership, assets or revenue, and changes to a member firm’s service providers.
Lax & Neville LLP has nationally represented small broker-dealers, financial services professionals and securities industry companies in regulatory matters, including regulatory enforcement proceedings, and securities-related and commercial litigation. Please contact our team of attorneys for a consultation at (212) 696-1999.