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FINRA Readies Changes to Communications Rules

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The Financial Industry Regulatory Authority will consider proposed changes at its April Board meeting to the rules regarding communications with the public, as well as gifts, gratuities and noncash compensation.  

The self-regulator is also taking comments until mid-May on its member application rules.

FINRA said in December that it would issue changes and provide further guidance regarding its rules on communications with the public as well as gifts, gratuities and noncash compensation after a retrospective review found those rules need updating.

FINRA announced last April that it was seeking feedback on the two rules as part of its “retrospective review” initiative.

Gerri Walsh, president of FINRA’s Investor Education Foundation and vice president of FINRA’s Investor Education, told attendees on Wednesday at the Investment Company Institute’s Retirement Summit in Washington that FINRA will now “take action to facilitate, simplify and provide guidance” on those rules. “You’ll be seeing some changes in the coming months.”

A FINRA spokesperson told ThinkAdvisor that FINRA staffers are in the process of updating the existing guidance surrounding the communications and gift rules and are determining areas in which to provide new guidance.

FINRA’s board will consider this month proposed amendments to rules 2210 (Communications with the Public) and 2214 (Requirements for the Use of Investment Analysis Tools) to revise the filing requirements pertaining to retail communications and Rule 2213 (Requirements for the Use of Bond Mutual Fund Volatility Ratings) to refine the scope of the disclosures required. The proposed changes stem from the retrospective rule review process FINRA initiated in 2014, and are intended to “better align the investor protection benefits and the economic impacts.”

Other items to be reviewed by the board this month include:

  • Proposed amendment to Rule 0150 (Application of Rules to Exempted Securities Except Municipal Securities) to extend the rule governing markups and markdowns to transactions in U.S. Treasury securities;
  • Establishing a delivery and administration fee for the Municipal Advisor Representative Examination (the Series 50 examination), which is sponsored by the MSRB; and
  • Proposed amendments to the Trading Activity Fee for firms with no customers that are engaged solely in proprietary trading activity for their own accounts.

— Check out New FINRA Broker Bonus Rule Out ‘Fairly Soon’: Ketchum  on ThinkAdvisor.

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