FINRA is making available updates to interpretations in the Interpretations of Financial and Operational Rules that have been communicated to FINRA by the staff of the SEC’s Division of Trading and Markets (SEC staff). The updated interpretations are with respect to Securities Exchange Act (SEA) Rules 15c3-1 and 15c3-3.
FINRA Regulatory Notice 21-26 FINRA Amends Rules 5122 and 5123 Filing Requirements to Include Retail Communications That Promote or Recommend Private Placements
FINRA has adopted changes to FINRA Rules 5122 (Private Placements of Securities Issued by Members) and 5123 (Private Placements of Securities) to require members to file retail communications that promote or recommend private placement offerings that are subject to those rules’ filing requirements. The new filing requirements become effective on October 1, 2021.
FINRA Regulatory Notice 21-25 FINRA Continues to Encourage Firms to Notify FINRA if They Engage in Activities Related to Digital Assets
For the past several years, FINRA has encouraged firms to keep their risk monitoring analyst informed if the firm, or its associated persons or affiliates, engaged, or intended to engage, in activities related to digital assets, including digital assets that are non-securities. FINRA appreciates members’ cooperation with this request and is encouraging firms to continue to keep their risk monitoring analyst abreast of their activities related to digital assets on an ongoing basis.
This Special Notice seeks comments that will help inform and guide the investor education initiatives FINRA and the FINRA Investor Education Foundation (the FINRA Foundation) undertake. In particular, we seek input from firms, investors, investor advocates, academics and other stakeholders who are knowledgeable about investor behavior regarding the most effective methods for educating newer investors. This Notice is not focused on existing regulatory requirements applicable to member firms and their interactions with investors.
FINRA-2021-015 Proposed Rule Change to Amend FINRA Rules 1210 (Registration Requirements) and 1240 (Continuing Education Requirements)
FINRA is proposing to amend FINRA Rule 1240 (Continuing Education Requirements). The proposed rule change also makes conforming amendments to FINRA Rule 1210 (Registration Requirements). Among other changes, the proposed rule change requires that the Regulatory Element of continuing education be completed annually rather than every three years and provides a path through continuing education for individuals to maintain their qualification following the termination of a registration.
FINRA Regulatory Notice 21-23 FINRA Reminds Member Firms of Requirements Concerning Best Execution and Payment for Order Flow
FINRA is issuing this Notice to remind member firms of longstanding Securities and Exchange Commission (SEC) and FINRA rules and guidance concerning best execution and payment for order flow, which the SEC has defined very broadly to refer to a wide range of practices including monetary payments and discounts, rebates, or other fee reductions or credits. Under these rules and guidance, member firms may not let payment for order flow interfere with their duty of best execution.
FINRA Regulatory Notice 21-22 FINRA Alerts Firms to Phishing Email From “FINRA Support” From the Domain Name “westour.org”
FINRA warns member firms of an ongoing phishing campaign that involves fraudulent emails purporting to be from “FINRA SUPPORT” with the email address “firstname.lastname@example.org”. The email asks the recipient to pay attention “to the report attached below that requires your immediate response” and states that “[t]he attachment contains our updated Public Policy information.” The emails may not include an attachment.
Effective September 1, 2021, FINRA is amending its rulebook to eliminate the Order Audit Trail System (OATS) rules in the FINRA Rule 7400 Series and FINRA Rule 4554 (Alternative Trading Systems — Recording and Reporting Requirements of Order and Execution Information for NMS Stocks) (collectively referred to as the “OATS Rules”). FINRA has determined that the accuracy and reliability of the Consolidated Audit Trail (CAT) meet the standards approved by the SEC and has determined to retire OATS as of September 1, 2021.
FINRA Regulatory Notice 21-20 FINRA Alerts Firms to Phishing Email Using “gateway-finra.org” Domain Name
FINRA warns member firms of an ongoing phishing campaign that involves fraudulent purporting to be from FINRA and using the domain name “@gateway-finra.org.” The email asks the recipient to click a link to “view request” and provide information to “complete” that request, noting that “late submission may attract penalties.”
FINRA Regulatory Notice 21-19 FINRA Requests Comment on Short Interest Position Reporting Enhancements and Other Changes Related to Short Sale Reporting
FINRA is requesting comment on potential enhancements to its short sale reporting program. FINRA is considering: (1) modifications to its short interest reporting requirements (Rule 4560); (2) a new rule to require that participants of a registered clearing agency report to FINRA information on allocations to correspondent firms of fail-to-deliver positions; and (3) other potential enhancements related to short sale activity. FINRA believes that these potential changes could improve the usefulness of short sale related information to FINRA, other regulators, investors and other market participants.
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