FINRA Submits Further Revisions To Remote Supervision Proposal

Posted on April 6th, 2023 at 3:05 PM
FINRA Submits Further Revisions To Remote Supervision Proposal

From the desk of Jim Eccleston at Eccleston Law 

The Financial Industry Regulatory Authority (FINRA) has submitted to the Securities and Exchange Commission (SEC) another revision to one of its two remote supervision proposals. 

The new proposal would classify advisors' home offices as, "remote supervisory locations," which are only subject to examination once every three years as opposed to annually. However, the proposal further restricts which firms can qualify as books and records are not to be, "physically or electronically maintained or preserved," at the advisor's home. The new proposal is intended to, "take into account," the concerns of state regulators and investor advocates, who contend that the remote supervision rules will make it more difficult to monitor outside business activities (OBAs) and other potential conflicts. 

The revision is set to exclude firms that have been suspended or have been a FINRA member for less than 12 months from qualifying for remote inspections. The revision will additionally make any location ineligible for remote inspections if any of the advisors have been the subject of an investigation, "or other action relating to failure to supervise," according to FINRA. The revision did not alter FINRA's second proposal, which would create a pilot program permitting some firms to complete branch office examinations remotely. 

 

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

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