FINRA Sends More Remote Office Updates to SEC
FINRA is adding more criteria to its Residential Supervisory Location plan.
The Financial Industry Regulatory Authority has filed to further amend its Residential Supervisory Location plan to include more stringent eligibility criteria.
FINRA filed on July 3 rule changes with the Securities and Exchange Commission to amend Rule 3110 to:
- Adjust the location ineligibility criteria pertaining to an associated person with less than one year of supervisory experience to also be satisfied by experience at a member firm’s affiliate or subsidiary that is registered as a broker-dealer or investment adviser;
- Clarify the scope of the location ineligibility criteria pertaining to an associated person who is the subject of an investigation or proceeding by a regulator relating to an allegation of a failure to supervise by defining these terms as they are defined in Form U4 (Uniform Application for Securities Industry Registration or Transfer Registration) and address the applicability of the proposed exclusion when an investigation has remained pending for a period of time; and
- Require a firm to conduct and document a risk assessment for each office or location before designating such office or location as a Residential Supervisory Location (or “RSL”), including a non-exhaustive list of factors to consider as part of that risk assessment.
On March 31, FINRA refiled with the SEC a revamped plan to make changes to FINRA Rule 3110 to allow a home office to be considered a non-branch “residential supervisory location” under certain conditions. The revised plan tightens eligibility rules.
A “refreshed” Remote Inspections Pilot proposal was filed with the SEC on April 14.
Under the plan, “an office or location at which an associated person is engaged in proprietary trades, including the incidental crossing of customer orders, or the direct supervision of such activities, would be excluded,” FINRA explains.
The 2022 Remote Inspections Pilot proposal previously excluded associated persons who were “part of a member’s trading desk,” according to FINRA.
The new proposal would also require firms to provide FINRA “data and information from 2019, including the total number of inspections conducted, the number of offices or locations where findings were identified, the number of findings and a list of most significant findings,” FINRA said.
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