FINRA Seeks to Extend Remote Inspections Through 2023
From the Desk of Jim Eccleston at Eccleston Law.
The Financial Industry Regulatory Authority (FINRA) is once again seeking to extend a temporary rule permitting financial advisory firms to remotely examine branch offices.
FINRA has submitted a proposal to the Securities and Exchange Commission (SEC) to extend remote inspections through 2023. The temporary rule was expected to expire at the conclusion of 2022, while FINRA is considering a separate rule proposal that would create a pilot program for remote inspections to serve as a more permanent solution. According to FINRA, the extension “would avoid a potential lapse in the temporary relief while challenges from COVID-19 persist, provide firms regulatory continuity in meeting their inspection obligations during the remaining Commission review period of the Pilot Proposal, and allow firms time to adapt to the pilot program, if approved, and prepare for conducting on-site inspections, as applicable.”
In July, FINRA submitted a separate proposal that aimed to reclassify advisors’ home offices as “remote supervisory locations”, which require exams every three years rather than annually. State securities regulators in August asked the SEC to extend the temporary rule to allow FINRA to “build the record necessary to assess and then offer evidence-based proposals.”
Critics of remote inspections have raised concerns that they are not as effective in preventing and detecting wrongful behavior as with in-person inspections.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, regulatory and disciplinary matters.
Tags: eccleston, eccleston law, advisors, law, finra
