The Securities Industry/Regulatory Council on Continuing Education (Council) recently published its Q3 2020 Firm Element Advisory (FEA). The report features many of the same topics discussed in its Firm Element Advisory from last year. All new material is denoted by a “(New!)” next to the appropriate title.
Alternative Investments
FINRA is monitoring developments in the digital asset marketplace and is undertaking efforts to ascertain the extent of FINRA member involvement related to digital assets.
Resources
- FINRA Encourages Firms to Notify FINRA if They Engage in Activities Related to Digital Assets
- Investor Alert: Don’t Fall for Cryptocurrency Related Stock Scams
- NASAA Reminds Investors to Approach Cryptocurrencies, Initial Coin Offerings and Other Cryptocurrency-Related Investment Products with Caution
Firm Element Courses: Cryptocurrency, Digital Assets [See courses]
Anti-Money Laundering
Firms must maintain current AML programs and train staff appropriately. Provided below are options of courses that relate to AML rules, regulations and compliance.
Resources
- FINRA Amends Capital Acquisition Broker Rule 331 to Conform to FinCEN’s Final Rule on Customer Due Diligence Requirements for Financial Institutions
- FINRA Amends Rule 3310 to Conform to FinCEN’s Final Rule on Customer Due Diligence Requirements for Financial Institutions
- FINRA Provides Guidance to Firms Regarding Anti-Money Laundering Program Requirements Under FINRA Rule 3310 Following Adoption of FinCEN’s Final Rule to Enhance Customer Due Diligence Requirements for Financial Institutions
- FINRA Provides Guidance to Firms Regarding Suspicious Activity Monitoring and Reporting Obligations
Firm Element Courses: Advanced Anti-Money Laundering Overview, Anti-Money Laundering: Beneficial Ownership, Anti-Money Laundering Detection and Prevention for Agents, Anti-Money Laundering for Agents and Representatives: Overview, Detection and Prevention, Anti-Money Laundering for Wholesalers: Your Role in Detecting and Deterring Money Laundering Activity [See courses]
Business Continuity Planning
Business continuity remains a priority for firms and their associated persons. It is important that firms maintain adequate business continuity and contingency plans, and ensure that employees are aware of and understand these plans.
Resources
- FINRA Updates Designation Criteria to Require Firms Reporting U.S. Treasury Securities to TRACE to Participate in FINRA’s Business Continuity/Disaster Recovery Testing
- FINRA Publishes Consolidated Criteria to Designate Firms for Mandatory Participation in FINRA’s Business Continuity/Disaster Recovery Testing
- FINRA Topic Page: Business Continuity Planning
- FINRA Small Firm Business Continuity Planning Template
- BC/DR Testing Under Regulation SCI
- (New!) Pandemic-Related Business Continuity Planning, Guidance and Regulatory Relief
Firm Element Course: Business Continuity Planning [See courses]
Communications
FINRA issued guidance regarding the application of FINRA rules governing communications with the public to digital communications, in light of emerging technologies and communications innovations.
Resources
- Guidance On Social Networking Websites And Business Communications
- Disclosure Innovations In Advertising And Other Communications With The Public
- SEC Approves Amendments to Rules Governing Communications With the Public
- FINRA Provides Guidance on Customer Communications Related to Departing Registered Representatives
Firm Element Courses: FINRA Rule 2273 – Educational Communication Related to Recruitment Practices and Account Transfers, Changes to FINRA’s Public Communication Rules for Registered Representatives, Changes to FINRA’s Public Communication Rules for Supervisors, Electronic Communications for Registered Representatives, Communications with the Public: Best Practices for Wholesalers, Social Media: Supervision of Online Communication [See courses]
COVID Related Resources
The COVID-19 pandemic significantly affected firms’ day-to-day operations across the securities industry, including requiring firms to transition most or all their staff to remote work environments and implement remote supervisory practices. FINRA is committed to providing guidance, updates and other information to help firms and stakeholders stay informed about the latest regulatory developments relating to COVID-19.
Resources
- (New!) FINRA’s COVID-19/Coronavirus Topic Page
- (New!) FINRA Shares Practices Implemented by Firms to Transition to, and Supervise in, a Remote Work Environment During the COVID-19 Pandemic
- (New!) MSRB COVID-19 Resource Pages
Firm Element Courses: Security Best Practices for Remote Workers Amid COVID-19 [See courses]
Cybersecurity
Given the evolving nature, increasing frequency, and sophistication of cybersecurity attacks – as well as the potential for harm to investors, firms, and the markets – cybersecurity practices are a key focus for FINRA.
Resources
- FINRA Report on Cybersecurity Practices
- FINRA Warns Firms of Regulator Impersonators
- (New!) FINRA Imposter Registered Representative Websites: Fraudsters Using Registered Representatives Names to Establish Imposter Websites
- (New!) FINRA Reminds Firms to Beware of Fraud During the Coronavirus (COVID19) Pandemic
- (New!) FINRA Warns of Fraudulent Phishing Emails Purporting To Be From FINRA
- (New!) Cybersecurity Alert: Measures to Consider as Firms Respond to the Coronavirus Pandemic
Firm Element Courses: Cybersecurity for Registered Representatives, Cybersecurity for Supervisors, Cybersecurity, Cybersecurity and FINRA, Cybersecurity: Phishing, Phishing Awareness – The Human Factor of Security [See courses]
Duties And Conflicts Of Interest
FINRA published a Report on Conflicts of Interest in the broker-dealer industry to highlight effective conflict management practices that may go beyond current regulatory requirements and identify potential problem areas.
Resources
- FINRA Report on Conflicts of Interest
- FINRA Topic Page: Suitability
- (New!) Modernization of Regulation S-K Items 101, 103, and 105
- (New!) SEC Amends Definition of “Accredited Investor”
- (New!) FINRA Amends its Suitability, Non-Cash Compensation and Capital Acquisition Broker (CAB) Rules in Response to Regulation Best Interest
Firm Element Courses: Conflicts of Interest, Department of Labor Fiduciary/Conflicts of Interest Rule, Conflicts of Interest for Institutional Clients, Identifying and Mitigating Conflicts of Interest, FINRA Restrictions on Broker Political Contributions [See courses]
Dispute Resolution
Over the past several years, FINRA has found that some firms have failed to reasonably supervise brokers’ recommendations of multi-share class products. FINRA has raised concerns specifically regarding firms’ supervision of shareclass recommendations to customers of 529 savings plans.
Resources:
- FINRA’s 529 Plan Share Class Initiative Encourages Firms to Self-Report Potential Violations
- FINRA Revises the Sanction Guidelines
- SEC Approves Amendments to Arbitration Codes to Provide an Additional Hearing Option in Simplified Arbitration
- (New!) FINRA Amends Rules Governing Application Program to Incentivize Payment of Arbitration Awards
- (New!) FINRA Amends Arbitration Code to Expand Options Available to Customers if a Firm or Associated Person Becomes Inactive
Firm Element Course: 529 Plans and ABLE Programs, FINRA Code of Arbitration and Mediation and Procedure [See courses]
Financial Responsibility Rules For Broker-Dealers
Resources
- FINRA Announces Updates of the Interpretations of Financial and Operational Rules
- Risk Mitigation Techniques for Uncleared Security-Based Swaps
- CrossBorder Application of Certain Security-Based Swap Requirements
- Guidance on FOCUS Reporting for Operating Leases
Firm Element Course: The Role of the FINOP [See courses]
Investment Banking
Resources
- SEC Approval of FINRA Funding Portal Rules and Related Forms
- SEC Approves “Pay-to-Play” and Related Rules for Capital Acquisition Brokers
- FINRA Topic Page: Private Placements
- FINRA Reminds Firms of their Obligations Under SEC Rule 15c2-11(A)(4)
- (New!) FINRA Provides Guidance on Retail Communications Concerning Private Placement Offerings
- (New!) FINRA Amends the FINRA Corporate Financing Rule
Firm Element Courses: Understanding the JOBS Act of 2012, Private Placements, Advanced Private Placements, Private Placements – Vol. 2 [See courses]
Margin
Resources
- Margin Requirements for Exchange-Traded Notes
- FINRA Extends Effective Date of Margin Requirements for Covered Agency Transactions
- (New!) Updates to Interpretations of FINRA’s Margin Rule Regarding Control and Restricted Securities and Consolidation of Accounts
Firm Element Courses: Margin Trading [See courses]
Municipal Securities
Resources
- (New!) MSRB Harmonizes Rules with Requirements of Regulation Best Interest
- Obligations of Senior Syndicate Managers Utilizing Electronic Communications
- MSRB Answers FAQs Regarding Use of Municipal Advisory Client Lists and Case Studies Under MSRB Rule G-40
- Compliance Advisory for Municipal Advisors
- SEC Approves Amendments to MSRB Rule G-3 to Establish a Municipal Advisor Principal Qualification Examination
- SEC Approves Continuing Education Requirements for Municipal Advisors
Firm Element Courses: MSRB Catalog [See full catalog]
Mutual Funds
Resources
Firm Element Courses: Advanced Look at Mutual Funds, Mutual Fund Class Shares, Mutual Fund Compliance, Mutual Fund Fee Waivers, Mutual Fund Investment Objectives and Risks, Regulation Best Interest (Reg BI) and Associated Materials [See courses]
Options
Resources
- Supplement to the Options Disclosure Document
- Cboe Regulatory Options Circular RG18-028
- (New!) Minor Rule Violation Plan Provisions for CAT Compliance Rules
- (New!) Regulatory Coordination Concerning CAT Reporting Compliance
Firm Element Courses: Options Basic, Advanced Options Strategies, Alternative Investments [See courses]
Registration And Disclosure
Resources
- Presentation Changes and New Functionality in the Central Registration Depository (CRD®) System
- FINRA Requests Comment on a Proposal to Implement the Recommendations of the CE Council Regarding Enhancements to the Continuing Education Program for Securities Industry Professionals
- Administrative Changes to the Continuing Education Regulatory Element Programs
- FINRA Requests Comment on Enhancements Under Consideration by the Securities Industry/Regulatory Council on Continuing Education
Firm Element Courses: FINRA Rule 2210: The BrokerCheck Amendment, Electronic Communications for Registered Representatives [See courses]
Reporting
Resources:
- SEC Approves Amendments Relating to Transactions in U.S. Treasury Securities Executed to Hedge a Primary Market Transaction
- FINRA Reminds Firms of their Obligations Regarding TRACE Reporting
- TRACE Reporting of OTC Transactions in Listed Bonds
- Disclosure of Order Handling Information
- (New!) FINRA Reminds Firms of Their Supervisory Responsibilities Relating to CAT
- (New!) FINRA Provides Updates on Regulatory Coordination Concerning CAT Reporting Compliance
Firm Element Courses: TRACE Reporting, Fixed Income Transaction Reporting [See courses]
Research
Resources:
- FINRA Topic Page: Research Analysts
- FINRA Amends Rules 2210 and 2241 to Conform to the Fair Access to Investment Research Act of 2017
Firm Element Courses: Ethics and Research Analysts FINRA Conduct Rules, Research Analysts: Research Reports and Conflicts of Interest, and Information Barriers for Institutional Firm [See courses]
Senior Investors
Resources
- SEC Approves Rules Relating to Financial Exploitation of Seniors
- NASAA Model Act to Protect Seniors and Vulnerable Adults
- NASAA Broker-Dealer Section Study of Senior Practices and Procedures, 2016-2017
Firm Element Courses: Compliance Safety Measures when Working with Senior Investors, Protecting Senior Investors, Suitability: Red Flags for Seniors, Senior Exploitation and Regulatory Concerns [See courses]
Trading
Resources
Firm Element Courses: Preventing and Detecting Unauthorized Trading, Securities Trading, Advanced Look at Insider Trading, Insider Trading, Best Execution and Debt Mark Ups, Order Execution Qualifiers [See courses]
Variable Annuities
Resources
- FINRA Provides Guidance on Firm Responsibilities for Sales of Pension Income Stream Products
- (New!) Updated Disclosure Requirements and Summary Prospectus for Variable Annuity and Variable Life Insurance Contracts
Firm Element Courses: A Professional’s Guide to FINRA Rules on Variable Annuities and Variable Insurance Prospecting, Fixed and Variable Annuities vs. Mutual Funds, Variable Annuities: The L Share Class, Suitability of Variable Annuity Products [See courses]
To view the complete Q3 2020 Firm Element Advisory, click here.
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