09-16 ALL FIRMS
SEC Approves Amendments to Require Arbitrators to Provide an Explained Decision at Parties' Joint Request; Effective Date: April 13, 2009
Effective April 13, 2009, FINRA requires arbitrators to provide an explained decision at the parties' joint request. An explained decision is fact-based and will state the general reasons for the arbitrators' decision. Parties are required to submit any joint request for an explained decision at least 20 days before the first scheduled hearing date. The chairperson of the arbitration panel will write the explained decision. This applies to all arbitration cases in which an initial pre-hearing conference has not been held, or waived by the parties, by the effective date.
09-17 ALL FIRMS
FINRA Provides Guidance on Its Enforcement Process
One of FINRA’s most important functions is the fair and effective enforcement of rules
contained within the FINRA Rulebook, the rules of the Municipal Securities Rulemaking
Board and the federal securities laws and rules.
FINRA is providing this guidance to provide transparency into its enforcement process, to assist firms and their associated persons in understanding how the investigative process works and to highlight procedural safeguards in this process, including:
- Enforcement Procedures and Managerial Oversight
FINRA investigates and litigates cases pursuant to internal procedures that set forth policies and procedures governing the investigative enforcement process.
- Conducting Investigations
All FINRA investigations are non-public and confidential; firms and individuals are entitled to be represented by counsel. The staff engages an objective fact-finding process when conducting an investigation, without bias for or against the parties involved.
- Sufficiency of Evidence Reviewed
At the conclusion of the investigation, FINRA staff analyses the evidence and the applicable laws to make a preliminary determination if a violation has occurred.
If a preliminary determination to proceed with formal discipline is made, FINRA staff will call the individual, firm or counsel informing them of FINRA’s intention to recommend formal disciplinary action.
- Disciplinary Advisory Committee
The Disciplinary Advisory Committee (DAC) reviews all significant cases and matters where legal or factual issues exist.
- Litigation Group Consultation Process
Most cases will be settled prior to litigation through the issuance of a settlement document called a Letter of Acceptance Waiver and Consent. A Litigation Group consultation takes place for any case in which a formal complaint is filed.
- Independent Office of Disciplinary Affairs
FINRA’s Office of Disciplinary Affairs (ODA) is independent of FINRA Enforcement and is not involved in the investigation or litigation of cases. ODA is in charge of reviewing the proposed settlement or complaint to provide an independent review of the legal issues and evidence of the charges proposed by the staff.
- Independent Office of Hearing Officers
FINRA hearings are administered by a Hearing Officer who is employed by FINRA in the Office of Hearing Officers (OHO). OHO is independent of Enforcement and like ODA is not involved in the investigative process.
09-18 OPTIONS FIRMS
EBS Submissions Following Implementation of the Option Symbology Initiative
The Options Clearing Corporation and its participant exchanges have begun the implementation of the Option Symbology Initiative, which will affect FINRA member firms’ Electronic Blue Sheet submissions. Firms will be expected to describe all exchange-traded options using explicit data elements instead of using the Options Price Reporting Authority, beginning February 12, 2010. This modified format can be used on a voluntary basis now.
09-19 ALL FIRMS
Amendments to FINRA Rule 9520 Series to Establish Procedures Applicable to Firms and Associated Persons Subject to Certain Statutory Disqualifications
Effective Date June 15, 2009
FINRA Rule 9520 Series sets forth eligibility requirements under which FINRA may allow a person subject to a statutory disqualification to enter or remain in the securities industry. FINRA’s revised definition of disqualification incorporates the following three additional categories of statutory disqualification:
- Willful violations of the federal securities or communities laws
- Grounds for statutory disqualification that were established by the Sarbanes-Oxley Act
- Associations with certain other persons subject to statutory disqualification
09-20 GENERAL SECURITIES FIRMS
Three New Consolidated FINRA Rules
In February and March 2009, the SEC approved three new consolidated FINRA rules relating to:
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Transfer of Customer of customer accounts in the context of employment disputes
Recommendations to customers in OTC Equity Securities
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Anti-Intimidation/Coordination
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These rules will take effect on June 15, 2009.
09-21 GENERAL SECURITIES FIRMS
FINRA Adoption of Amendments Relating to Reporting Transfers of Proprietary Positions in Debt and Equity Securities in Connection with Certain Corporate Control Transactions
Effective May 4, 2009, firms are not required to report to FINRA transfers of proprietary positions in debt and equity securities between two member firms or non-member broker-dealer under the following conditions:
- The transfer must be in connection with a merger of one firm with another firm or an indirect acquisition of one firm by another firm or their parent company.
- The transfer cannot be in expansion of the firm’s trading or investment strategy
09-22 ALL FIRMS
FINRA Request for Comment on Proposed Consolidated Rule Governing Personal Securities Transaction for or by Associated Persons
Proposed FINRA Rule 3210 combines and streamlines certain provisions of the NASD Rule 3050 and NYSE Rule 407 and adopts additional requirements designed to promote more effective supervision of the personal trading activities of associated persons.
Information Notice – April 29, 2009 ALL FIRMS
This Notice is to remind firms that they may not use the FINRA logo on their websites, business cards, stationary or other marketing materials in any matter. However, a firm may refer to itself as a “FINRA Member Firm” or “Member of FINRA.” If a firm refers to its FINRA membership on the firm website, pursuant to NASD IM-2210-4, it is required to provide a hyperlink to FINRA’s website (www.finra.org).
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