The
Financial Industry Regulatory Authority Inc. has requested comments as part of a review of its rules that cover outside business activities and private securities transactions.
The review is part of an ongoing Finra initiative to look at all its operations and programs, with an eye to examining the degree to which the self-regulatory organization's rules address the problems they are intended to mitigate.
The review centers on rules governing broker-dealer employees' business and securities activities carried out away from their firm — activities that are outside the regular course or scope of their employment with the firm. These rules were designed to protect investors from potentially problematic or risky activities that are unknown to the firm but could be perceived by the investing public as either part of the firm's business or having the firm's imprimatur. In addition, the rules protect firms from reputational or litigation risks when employees engage in business and securities activities outside of the firm.
"Regularly reviewing significant rules to ensure they remain effective at protecting investors in an efficient manner is a key priority that aligns with our Finra360 initiative," said Finra CEO Robert W. Cook in a press release. "Successful self-regulation requires continuous renewal and improvement. Meaningful dialogue with stakeholders is essential to that process."
Since assuming his role in August 2016, Mr. Cook has heard — as part of an ongoing listening tour — from investors, member firms, investor advocates, regulators, trade associations and Finra employees, among other stakeholders, about what the regulator is doing well and what it could be doing better.
Finra360 provides a framework to address this feedback and ensure that Finra is committed to ongoing improvement. As part of the effort, Finra in recent weeks requested comment on the organization's rules impacting capital formation, as well as is engagement programs.
Comments on the outside business activities and private securities transactions rules must be received by June 29.
