Top Issues: Recruitment of Registered Reps, Expungement of Arbitration Complaints.

[ by Howard Haykin ]

The FINRA Board of Governors has handle a full rulemaking agenda when it meets next on 12/6/12.  It is expected that the Board will authorize FINRA staff members, for the most part, to submit for SEC approval new rules and rule amendments on most of the following "hot button" issues:

1.  Conflicts of Interest Relating to Recruitment Compensation Practices.   A proposed rule would require that firms disclose to transferring customers information about their policies and procedures, as they pertain to any recruitment compensation packages offered to induce registered reps to move from one firm to another.  
 

2.  Equity Trade Reporting Requirements.   Proposed amendments to FINRA trade reporting rules would reduce the time that member firms have to report OTC transactions in NMS stocks and OTC equity securities to FINRA.
 

3.  Expungement for Unnamed Persons in Arbitration Claims.   Proposed amendments would permit persons who are the "subject of" allegations of sales practice violations made in customer-initiated arbitration claims - but who are not named as parties to the arbitration - to seek expungement relief by several means. 

-  e.g., one proposal would have In re expungement proceedings initiated at the conclusion of the underlying customer-initiated arbitration case.  As drafted, the proposed rule change incorporates suggestions provided by commenters to April's Regulatory Notice 12-18, as well as views offered by members of a FINRA committee.

4.  FOCUS Report Supplementary Schedule.   A proposed supplementary schedule issued pursuant to FINRA Rule 4524, Supplemental FOCUS Information, would provide detailed information of long and short inventory positions held by firms.http://www.cnbc.com/id/38818154/
 

5.   Information Request for Funding Portals Under the JOBS Act.   It is proposed that FINRA seek essential information from prospective funding portals intending to apply for membership with FINRA pursuant to the JOBS Act.  As proposed, prospective funding portals would file the information with FINRA voluntarily until final SEC and FINRA rules governing funding portals are in place.
 

6.  Wash Sales.   It is proposed the FINRA Rule 5210, Publication of Transactions and Quotations, be amended to address a firm's obligation to have policies and procedures in place that are reasonably designed to review the firm's trading activity for, and prevent, certain wash sale transactions  - i.e., transactions in a security that involve no change in the beneficial ownership of the security.

C-I will report on the Board's decisions immediately following the meeting.
 

For further details go to:   [FINRA Communications to Firms, 11/28/12].