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Regulation and Compliance > Federal Regulation > FINRA

FINRA Says BDs Must Continue Yearly Compliance Meetings

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The Financial Industry Regulatory Authority has decided to continue requiring that broker-dealers conduct an annual compliance meeting.

Under a retrospective review of its annual compliance meeting (ACM) requirement in Rule 3110(a)(7), FINRA states in Regulatory Notice 19-34 that the rule “continues to meet its regulatory objectives effectively and efficiently,” and that the broker-dealer regulator will maintain the rule in its current form.

FINRA will, however, continue to monitor potential impacts to Rule 3110(a)(7) in light of the ongoing review of the potential enhancements to the Continuing Education Program.

The Securities Industry/Regulatory Council on Continuing Education, in partnership with FINRA and other self-regulatory organizations, “is currently exploring a number of opportunities to improve the effectiveness and efficiency” of the CE program, FINRA explained.

Included in this effort is assessing how the ACM requirement may be coordinated with CE training requirements.

FINRA states that it “intends to continue working closely with the CE Council to assess the feedback received from firms on, among other things, identifying potential redundancies in training requirements.”

Rule 3110(a)(7) requires each registered rep and registered principal to participate, at least once each year, in an interview or meeting at which compliance matters relevant to their particular activities are discussed.

“The requirement gives registered persons the opportunity to regularly discuss compliance issues and assists the firm in ensuring that registered persons remain current on applicable regulatory developments or changes in firm policies,” FINRA states.

The ACM rule has been in place since the late 1980s in connection with the larger effort that FINRA (then National Association of Securities Dealers) had undertaken at that time “to substantially expand and specify the baseline attributes that a supervisory system of a firm must have regardless of its size or business model or lines of business,” FINRA explains.

The compliance meeting provides firms the opportunity to review compliance matters relevant to the particular registered person.

“Those relevant matters, in turn, will depend on the business of each firm and the particulars of their compliance policies and procedures. Through this meeting (or meetings, if they are conducted more frequently than annually), registered persons have the opportunity to regularly discuss compliance issues,” FINRA states.

The meetings also provide a way “for firms to ensure that their registered persons remain current on regulatory developments, firm policies or other matters as appropriate,” according to FINRA.

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