The Financial Industry Regulatory Authority has sent its revised outside activities plan to the Securities and Exchange Commission for approval.
The plan, filed with the SEC Wednesday, would adopt FINRA Rule 3290 (Outside Activities Requirements) and delete existing FINRA Rules 3270 (Outside Business Activities of Registered Persons) and 3280 (Private Securities Transactions of an Associated Person).
The proposed rule change — published in March — would also narrow the kinds of activities that are subject to the outside business activity requirements. Comments were due on the first plan by May 13.
While FINRA's rule proposal follows closely what FINRA proposed last March in Regulatory Notice 25-05, it also clarifies "a number of sticking points," Francois Cooke, managing director at ACA Group, told ThinkAdvisor Tuesday in an email.
Industry officials were waiting to see if FINRA's new plan included any changes to supervisory requirements for outside RIA activity.
FINRA applies private securities transaction requirements to outside IA activities. The proposal sought feedback on whether to exclude unaffiliated outside investment advisory activity from the rule altogether.
"Outside RIA activity will be excluded from supervision as long as there is no selling compensation," Cooke said Tuesday. "The activity only needs to be disclosed as an outside activity."
Also, under FINRA's new plan, "activities at affiliates, including investment adviser affiliates, would be excluded from consideration as an outside activity," Cooke said.
"The sale of home or secondary home (or rental), as well as activities with immediate family members related to securities activities where there is no-compensation" would also not be considered an outside activity, Cooke said.
Courtesy photo
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