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Stories of Interest
- Wells Fargo Has Shown Us Its Contemptible Values
- UBS to Counter Trading Troubles With M&A Work
- SEC Moves Quickly To Shut Down Fake Pre-IPO Share Scam
- SEC Testimony: Oversight of the SEC Division of Enforcement
- FINRA Modifies 'Agency Debt Security' in Rule 6710
- Is Jamie Dimon Doing a U-Turn on Bitcoin?
- After New Yorker's Racist Rant Goes Viral, His Law Firm Gets Pummeled with 1-Star Yelp Reviews
- Bill O’Donnell is New CFO at MetLife
- Trump Still Owes Deutsche Bank, Others as Much as $480Mn
- Wells Fargo Scandals Hurt Its Retirement Business
- Michigan State to Pay $500Mn to Victims of Larry Nassar's Abuse
- Top Lawyer at Novartis Leaving Over $1.2Mn Contract with Michael Cohen's Consulting Firm
- Cadwalader Adds Mark Chorazak to its Financial Regulation Practice
- Deutsche Bank: It's A Short According to Eisman of ‘The Big Short’ Fame
- Up In Smoke: Bank of Montreal Goes All-In on Pot Deals
- RBS to Pay $4.9Bn to Settle Toxic MBS Probe with U.S.
- Apple and Goldman Sachs Team Up to Release New Credit Card
- Robinhood, A Stock, Trading App Rejected by 75 Investors, Now Worth $5.6Bn
- Wells Fargo Reportedly Pocketed Fire And Police Department Pension Fund Fee Rebates
- Trading App Robinhood Surpasses E*Trade In User Numbers
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NEWSLETTERS & ALERTS
Rules & Regulations
Outside Business Activities & Private Securities Transactions – Rule Reform
FINRA proposes to amend its rules relating to Outside Business Activities (“OBAs”) and Private Securities Transactions (“PSTs”). Before any rule changes are filed with the SEC, the regulator seeks comments – which are due no later than 4/27/18.
FINRA Rule 3270 (OBAs of registered persons) and FINRA Rule 3280 (PSTs of an associated person) would be replaced with a single streamlined rule that would reduce unnecessary burdens while strengthening investor protections relating to outside activities. Of particular note, the change would address an area of particular concern among FINRA members - firm obligations for the investment advisory activities of their registered persons.
CORE CONCEPTS OF THE PROPOSED RULE.
- Selling Private Placements Away from Member. Subject to the proposed rule, potentially to the fullest extent – prior notice by the registered person and risk assessment by the member. If the member disapproves the activity, it has no further obligation. If the member approves the activity, the activity becomes part of the member’s business and must be supervised and recorded as such.
- Activities at Third-Party IA. Subject to the proposed rule, but in an intermediate manner – prior notice by the registered person and risk assessment by the member because it is investment related and not excluded from the proposed rule, but the member is not required to supervise or keep records of the IA activities.
- Non-Investment Related Work (e.g., car service, seasonal retail). Subject to the proposed rule, but in a limited manner – a registered person must provide prior notice to the member, but the member is not required to perform a risk assessment of or supervise the activity.
- Activities at Affiliates (e.g., IA, Insurance and Banking Affiliates). Generally excluded from the proposed rule – the proposed rule excludes activities at affiliates, whether or not investment related, unless those activities would require registration as a broker or dealer if not for the person’s association with a member.
- Personal Investments (e.g., Buying Away). Excluded from the proposed rule, but potentially subject to other rules (e.g., FINRA Rule 3210) or firm-imposed notice requirements.
[Click here for a full discussion of the proposal: FINRA RegNote 18-08.]