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Financial Services Law Insights and Observations

FINRA supplements guidance on enforcement credit for “extraordinary cooperation”

Agency Rule-Making & Guidance FINRA Enforcement

Agency Rule-Making & Guidance

On July 11, the Financial Industry Regulatory Authority (FINRA) issued Regulatory Notice 19-23, which provides clarifying guidance on enforcement credit for firms or individuals that provide “extraordinary cooperation” in investigations that exceed FINRA’s rule requirements. Specifically, FINRA defines “extraordinary cooperation” as including (i) self-reporting violations prior to regulator detection and intervention; (ii) taking voluntary, extraordinary steps to correct problems; (iii) making voluntary remediation to customers prior to detection; and (iv) providing a substantial amount of assistance to FINRA’s investigation. The notice, which supplements prior guidance issued in 2008, also clarifies the difference between required cooperation and extraordinary efforts, and outlines the types of credit firms or individuals may receive.

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