FINRA Adopts New Rules for Remote Inspections and Home Offices

Posted on February 14th, 2024 at 11:50 AM
FINRA Adopts New Rules for Remote Inspections and Home Offices

From the desk of Jim Eccleston at Eccleston Law 

The Financial Industry Regulatory Authority (FINRA) has implemented new rules to enhance its remote inspections pilot program and address home offices as "residential supervisory locations." The Securities and Exchange Commission has mandated that these rules adapt to the current hybrid work environment while maintaining crucial investor protections.

ThinkAdvisor reports that effective June 1, the rules surrounding residential supervisory locations establish private residences where associated persons engage in specified supervisory activities as non-branch locations. This new classification, known as a Residential Supervisory Location (RSL), will undergo inspections on a regular periodic schedule, presumed to occur at least every three years, deviating from the annual inspections required for Offices of Supervisory Jurisdiction (OSJ) and supervisory branch offices.

In July, FINRA sought to amend its residential supervisory location plan, introducing more stringent eligibility criteria. The changes to Rule 3110 include adjustments to location ineligibility criteria for associated persons with less than one year of supervisory experience, clarifications on investigation-related ineligibility criteria, and the requirement for firms to conduct and document a risk assessment for each office before designating it as an RSL.

 

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.

Tags: eccleston, eccleston law, finra

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