At the September FINRA Board of Governors meeting, the Board authorized publishing for comment two proposed rulemaking items. One would permit firms to use technology to conduct remote inspections of offices engaged in certain low-risk activities, which in turn would enable firms to reallocate compliance resources to activities that pose greater risks to investors. The other rule proposal would provide investors and others—subject to certain conditions—with expanded and more accurate access to certain specified information that is currently available through BrokerCheck.
Remote Office Inspections
With respect to the remote office inspections, the Board authorized publication of a Regulatory Notice soliciting comment on proposed amendments to FINRA Rule 3110 (Supervision) to provide members the flexibility to remotely conduct office inspections of “qualifying offices” where only low-risk activity takes place. Among other conditions, a “qualifying office” would be limited to no more than three associated persons, none of whom has a “disciplinary history” or is subject to statutory disqualification, and no customer funds or securities could be handled at the location. Under the proposal, a member firm that wishes to conduct remote inspections would be required to have policies and procedures reasonably designed to determine whether a location is eligible for remote inspection as a “qualifying office” and to assess whether a remote inspection of any such office is reasonable.
The Board also authorized publication of a Regulatory Notice soliciting comment on proposed amendments to Rule 8312 (FINRA BrokerCheck Disclosure). Specifically, the amendments would: (1) provide additional investment adviser information through BrokerCheck about individuals and firms with broker-dealer and investment adviser registrations; (2) make publicly available limited data sets of BrokerCheck information on individuals, similar to what is currently provided by the SEC through the Investment Adviser Public Disclosure site; (3) exclude from BrokerCheck information about deceased individuals and certain information pertaining to individuals unregistered since 1999; and (4) allow firms to include in BrokerCheck a comment about arbitration awards pertaining to the firm.
It is anticipated that the Regulatory Notices on the two proposed rule changes will be forthcoming shortly.