The Financial Industry Regulatory Authority is proposing to adopt restrictions for FINRA officers and employees similar to those that apply to former Securities and Exchange Commission employees.
FINRA filed on Wednesday a proposed rule change with the SEC that also proposes to adopt restrictions to prohibit current and former FINRA employees from misusing nonpublic FINRA information.
Proposed Rule 9910 — Post Employment Conflict of Interest Restrictions; Nonpublic Information — would prohibit:
- any former officer from making certain communications to or appearances before FINRA for one year from the end of employment;
- any former employee from making certain communications to or appearances before FINRA at any time in a particular matter involving a specific party or parties in which the employee was personally and substantially involved during his or her employment;
- any former employee from making certain communications to or appearances before FINRA for two years in a particular matter involving a specific party or parties, that was under the employee’s official responsibility during the last year of his or her employment; and
- any current employee from disseminating or disclosing, for a purpose unnecessary to the performance of FINRA job responsibilities, or a former employee from disseminating or disclosing, for any purpose, any nonpublic information obtained in the course of his or her employment with FINRA, unless the disclosure is expressly authorized by FINRA or is required or protected by law.
Brian Rubin, partner at Eversheds Sutherland in Washington, points out that the FINRA plan will not be a gag order on whistleblowers, as the proposal states that it doesn’t “limit current or former employees from making any disclosures protected by whistleblower statutes.”
The broker-dealer self-regulator’s proposed rule change, Rubin said, is meant “to deal with revolving door concerns,” similar to restrictions imposed by the SEC.
FINRA also proposes to expand prohibitions on former officers from appearing or providing expert testimony in a FINRA proceeding for one year following separation from FINRA, as well as adopt a new provision prohibiting “subject matter conflicts.”