The Financial Industry Regulatory Authority released Tuesday Regulatory Notice 20-33 seeking comment on new formal procedures for bringing actions against non-associated persons who cheat during a FINRA qualification exam.
The proposed formal procedures — a new expedited proceeding rule — would also strengthen existing processes for brokers who cheat or misbehave during a FINRA exam.
The reg notice seeks comment on FINRA Qualification Examinations Rules of Conduct as well as corresponding amendments to the registration requirements rule, Rule 1210.
“Although there are few instances of cheating, because persons who are not yet associated with a member firm may take the Securities Industry Essentials (SIE) examination or other FINRA qualification examinations, formal procedures are needed to address misconduct by non-associated persons when it occurs,” FINRA states.
Comments are due by Nov. 23.
Since its launch in October 2018, approximately 105,707 individuals, including associated and non-associated persons, have taken the SIE exam, FINRA states.
Of these, FINRA brought disciplinary actions against nine associated persons, alleging a violation of the Rules of Conduct and Rule 2010.
To date, as many as 35,000 individuals not associated with a member firm have taken the SIE exam. Of these individuals, FINRA has identified one instance of cheating.
Based on historical experience, FINRA can expect the proposed amendments to apply to 0.009% of all individuals who sit for the SIE examination.
— Check out Analyst Busted With Exam Cheat Sheets in His Shorts: FINRA on ThinkAdvisor.