FINRA proposes to restrict new member applicants’ and certain members’ association with disqualified persons, by proposing new FINRA Rule 1113, Restriction Pertaining to New Member Applications, and amending FINRA Rule 9520 Series, Eligibility Proceeding.

As proposed, FINRA Member Regulation will reject any application for FINRA membership in which either the applicant or any of its associated persons is subject to a statutory disqualification, as defined in Article III, Section 4 of the FINRA By-Laws.  The reasons: 

• a new member applicant should enter the membership app process free of the concerns and issues that can arise from either being associated with a disqualified person or being itself subject to a statutory disqualification. 
• a new member applicant has no prior operating or supervisory history, and therefore, cannot demonstrate adequately its ability to supervise a disqualified person.

The changes to Rule 9520 also would preclude new member applicants from sponsoring disqualified persons, and would clarify that a new member applicant is not eligible to submit an application for relief under the FINRA Rule 9520 Series where the applicant itself is subject to a disqualification, among other things. 

For further details, click onto:   [ Rule Filing 10-56, 11/1 ]