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FINRA provides guidance on qualification examinations
On May 12, FINRA added a new question to its frequently asked questions page regarding the availability of the waiver process for qualification examinations. FINRA has clarified that its waiver process is currently functional and FINRA may, in exceptional cases and where good cause is shown, waive the applicable qualification examinations and accept other standards as evidence of an applicant’s qualification for registration. Guidance is provided regarding how to submit a waiver request.
FINRA issues proposed rule change regarding timing, method of service, and other procedural requirements
On May 7, FINRA filed a proposed rule change with the SEC to provide temporary relief from certain timing, method of service, and other procedural requirements in FINRA rules during the outbreak of Covid-19. The proposed rule change would (i) allow or require, as applicable, FINRA to serve certain documents by email, (ii) require applicants, respondents, and other parties to file or serve documents by email for certain proceedings and processes, unless otherwise agreed by the parties, (iii) provide extensions of time to FINRA staff, respondents, and other parties in connection with certain adjudicatory and review processes, and permit oral arguments before the National Adjudicatory Council to be conducted by video conference.
FINRA reminds firms to be aware of fraud during Covid-19
On May 5, FINRA issued Regulatory Notice 20-13, reminding firms to be aware of the heightened threat of frauds and scams during the Covid-19 pandemic. The notice sets forth practices that firms may wish to implement to address risks relating to fraudulent account openings and money transfers, including a customer identification program, steps to monitor for fraud during account opening, bank account verification and restrictions on funds transfers, ongoing monitoring of accounts, collaboration with clearing firms, and compliance with Suspicious Activity Report filing requirements. The notice also sets forth methods that firms may employ to address risks relating to firm imposter scams and IT help desk scams.
FINRA updates FAQs to address meetings with members by video or audio conferencing and forwarding of firm mail
On April 16, FINRA updated certain questions in its FAQs related to regulatory relief due to Covid-19. The FAQs clarify requirements for a firm to supervise its registered representatives that meet with clients via a live video or audio conferencing platform. For such meetings, FINRA notes that members generally are not required to record live video or audio conferences with customers. However, to the extent the meeting utilizes chat or instant messaging features, or presents slides or other written (including electronic) communications, the member must keep records of these written communications, and their content must be consistent with applicable standards. Recorded live video or audio conversations with customers may need to be produced upon regulatory request. The FAQs also clarify situations in which the firm may redirect firm mail from a branch to an associated person's residence.
FINRA adds PPP question to Covid-19 FAQs
On April 13, FINRA updated its FAQs on regulatory relief due to Covid-19 to include an FAQ that addresses Paycheck Protection Program loans. The FAQ answers a question relating to loan forgiveness for registered persons, stating that the loan forgiveness amount will not be considered a “compromise with a creditor” and will not need to be reported on Form U4 for question 14K.
FINRA adds new Covid-19 FAQs
On April 6, FINRA added new FAQs to its Covid-19 regulatory relief FAQs document, which was launched in March (covered by InfoBytes here). The newly added FAQs state that (i) firms may electronically transmit required copies of the Uniform Termination Notice for Securities Industry Registration (Form U5) to terminated individuals; (ii) the prescribed period in which continuing education must be completed will be extended through May 31 for persons whose window is currently expired or set to expire before June; and (iii) late filing fees for Forms U4/U5 may be refunded or reduced upon request.
Previously, FINRA added FAQs regarding the “Net Capital Treatment of Covered Loans Under the CARES Act.” The FAQs cover adding back to net capital the “Forgivable Expense Amount” of a loan during the “covered period,” and excluding the loan amount from “aggregate indebtedness.” FINRA will continue to update the FAQ document as necessary, and it will issue a regulatory notice when a date for the termination of the temporary relief measures is determined.
FINRA provides guidance on Covid-19 impact on FINRA-administered exams
In March, FINRA announced that Prometric is closing its centers in the United States and Canada for a period of 30 days, starting March 18, 2020. Candidates for taking FINRA-administered exams who have an existing appointment may reschedule their appointment to a future date without incurring a rescheduling fee. In addition, FINRA will extend all enrollment windows that are currently open and scheduled to expire by the end of May.
FINRA provides cybersecurity alert containing measures firms should consider in adjusting to Covid-19
On March 26, FINRA released a cybersecurity alert providing FINRA firms and associated persons with measures they can take to help strengthen their cybersecurity controls in areas where risks may increase in the current environment. The alert contains recommendations concerning the security of office and home networks, computers, and mobile devices. It also addresses common methods of scams and attacks during Covid-19. The alert recommends that firms provide staff with training regarding cybersecurity.
FINRA provides regulatory operations update
On March 23, FINRA issued a statement providing that it will focus its regulatory operations on the following areas: (i) risk monitoring, market surveillance, and enforcement programs, prioritizing matters that present the most risk in this current environment; (ii) monitoring for fraud, illicit schemes, and other manipulative activities seeking to take advantage of the tumultuous conditions created by Covid-19 and ongoing market volatility; (iii) engaging in regular communication with firms and making targeted requests for information regarding financial and operational capabilities, among other matters; and (iv) providing guidance and targeted relief to member firms in meeting their regulatory obligations. The guidance also notes that FINRA is temporarily limiting new routine requests for information, including in connection with cycle examinations.
FINRA and SEC provide temporary extension of time for submission of fingerprint information
On March 20, the SEC issued an order that provides a temporary exemption until May 30, 2020, from the fingerprinting requirements of Securities Exchange Act Rule 17f-2 for FINRA members and their employees. On March 24, FINRA provided a temporary extension of time for submission of fingerprint information under Rule 1010(d) by notifying the SEC that FINRA’s members and their employees will rely on the SEC’s fingerprinting exemption. A FINRA member seeking to take advantage of this temporary exemption must comply with certain guidance published by FINRA.