Over the past few months, the Small Firm Advisory Board (SFAB) has met with FINRA senior executives to discuss issues and concerns that small firms have with current FINRA rule proposals.  On 4/18, the SFAB addressed how FINRA responded to these suggestions.

Suitability and know-your-customer rules. 

• Issues, Concerns. Effective dates of the new rules don't allow firms enough time to prepare to comply.
• FINRA Response.  The effective date of the new suitability and KYC rules was delayed until July 2012, to allow time for training and educating representatives, and to update systems and procedures.

Guidance on new rules.

• Issues, Concerns. Firms need more practical guidance in preparing to comply with new suitability, KYC, and reporting requirements.
• FINRA Response.   Answers to many of the questions are provided in RegNotes 11-25 and 11-32 - although more clarity is still needed.

SFAB communications.

• Issues, Concerns. Firms would like to hear from the SFAB directly.
• FINRA Response.   FINRA is hosting a small firm webinar on 9/7/11;  2 SFAB members and 2 FINRA senior staff members will address issues ranging from FINRA's exam program to resources available to help small firms.  FINRA and the SFAB also will be hosting regional roundtable meetings to promote communication with and among small firms and the SFAB.  First meeting is in San Francisco on Thursday, 9/22/11.

FINRA's committee service.

• Issues, Concerns. Many small firm industry colleagues would like to participate on FINRA committees, but don't know how.
• FINRA Response.   FINRA will be using a new and more open election process for its district committee elections - including 12 open spots for small firm representatives to serve on a district committee.  Officers or principals of small firms are eligible to run for these openings.

Compliance resources.

• Issues, Concerns. Firms have contracted with external vendors to keep up with increased regulatory requirements.
• FINRA Response.   FINRA maintains a list on the Firm Gateway of compliance resources and compliance resource providers that offer price discounts - at www.finra.org/firmgateway, firms can log in and visit the Resources section.  Firms can apply for a Wharton CRCP small firm scholarship for one of their compliance persons.  See www.finra.org/crcpscholarship for more details.

PCAOB survey results.

• Issues, Concerns.   Surveys demonstrate that the new PCAOB audit requirements increase the audit cost of small firms.
• FINRA Response.    Survey results will be used to influence the PCAOB to consider reducing or eliminating the PCAOB audit requirement for small firms.

Small firms and their senior management should provide SFAB members with any other issues they'd like to be considered.  Get your comments into SFAB by 8/30 in order to be considered for the 9/8/11 SFAB meeting.

For further information, go to:  [FINRA Small Firms Letter, 8/18/11]