FINRA Requests Comment on Proposed Amendments to Its Gifts, Gratuities and Non-Cash Compensation Rules. (a) General No member or associated person shall, directly or indirectly, pay any compensation, fees, concessions, discounts, commissions or other allowances to: (1) any person that is not registered as a broker-dealer under Section 15(a) of the Exchange Act but, by reason of receipt of any such payments and the activities related thereto, is required to be so registered under applicable . Samantha has focused her career on developing and implementing customized compliance programs for SEC, CFTC, and FINRA regulated organizations. Transactions Involving FINRA Employees, 2080. Arbitration and mediation case participants and FINRA neutrals can view case information and submit documents through this Dispute Resolution Portal. Communications with the Public and Customers Concerning Index Warrants, Currency Index Warrants and Currency Warrants, 2359. The text of the proposed rule follows this notice. Interpretive Letter to Robert L. Winston, American Funds Distributors, Inc. When traders move their cash into a Treasury Account on Public, they will earn the safe, reliable yield of Treasury bills.These short-term securities are issued by the US Treasury and typically pay a higher yield than traditional and high-yield savings accounts. Securities Offering and Trading Standards and Practices, 6000. Use of Investment Companies Rankings in Retail Communications, 2213. PROCEDURES ON GRIEVANCES CONCERNING THE AUTOMATED SYSTEMS, 9900. Multiple MPIDs for Alternative Display Facility Participants, 6183. Internal Audit Interpretive Letter to Harley Whitfield, American Equity Capital, Inc. Quotation, Order, and Transaction Reporting Facilities, 7000. Exemption from Trade Reporting Obligation for Certain Alternative Trading Systems, 6630. *These are suggested departments only. The referral fees that I received during the time period of 1999 through 2016 was $10,081-the equivalent of $504/year. 11640. FINRA, OGC [pursuant to a referral agreement]". 5 The opinion goes on . .01 Reasonable Support for Determination of Compliance with Section 15(a) of the Exchange Act. File a complaint about fraud or unfair practices. Order Entry and Execution Practices, 5310. Appointment of Hearing Panel, Extended Hearing Panel, 9240. Members that are uncertain as to whether an unregistered person may be required to be registered under Section 15(a) of the Exchange Act by reason of receiving payments from the member can derive support for their determination by, among other things, (1) reasonably relying on previously published releases, no-action letters or interpretations from the Commission or Commission staff that apply to their facts and circumstances; (2) seeking a no-action letter from the Commission staff; or (3) obtaining a legal opinion from independent, reputable U.S. licensed counsel knowledgeable in the area. Washington, DC 20006 Automated Submission of Trading Data Requested by FINRA, 8213. FINRA IS A REGISTERED TRADEMARK OF THE FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC. Disclaimer: The summary and detailed topics are only available for. Others may be appropriate for your firm. 97% of clients say they feel like their advisor cares about their ability to achieve goals. The NASD consistently has taken the position that it is improper for a member or a person associated with a member to make payments of "finders" or referral fees to third parties who introduce or refer prospective brokerage customers to the firm. January 10, 2023. Certificate in Name of Corporation, 11573. Firms might also receive other types of compensation from third parties (e.g., payment for order flow, cash sweep payments, mutual fund revenue sharing or marketing support payments, or cash referral fees from investment advisers) that are not tied directly to securities transactions, but that might Publication of Transactions and Quotations, 5230. SECURITIES OFFERINGS, UNDERWRITING AND COMPENSATION, 5200. The proposed Rule differs from the published interpretation described above by not including an exception from the prohibition for the payment of a nominal fee for a referral where the payment is occasional, not determined by the outcome of the referral, and where the recipient does not regularly engage in activity that might reasonably be expected to result in continued referrals.9 NASD Regulation preliminarily does not believe that there is a need for such an exception for a rule that is limited in application to referrals of brokerage account customers. Subsequently, Section (c) (3) goes on to exempt referral fee arrangements between licensees. The proposed new referral fee rule, NASD Rule 2460, would prohibit a member or a person associated with a member from paying cash or noncash compensation to any person (other than persons who are registered with the member or persons who are themselves NASD members) in connection with locating, introducing, or referring prospective brokerage account customers to the member. 2 vs. Hanmi Securities et al. Call for Review by the National Adjudicatory Council, 9800. Screening Failures Caused PPP Fraud. Exemption from Trade Reporting Obligation for Certain Alternative Trading Systems, 6732. Obtaining an Order of Expungement of Customer Dispute Information from the Central Registration Depository (CRD) System, 2081. The best tool FINRA provides when it comes to firms developing their annual compliance program is now available. Use of Information Obtained in Fiduciary Capacity. Transactions "Ex-Interest" in Bonds Which Are Dealt in "Flat", 11170. Authority of Panel to Direct Appearances of Associated Person Witnesses and Production of Documents Without Subpoenas, 13514. Determinations of Arbitration Panel, 12505. Registered representatives can fulfill Continuing Education requirements, view their industry CRD record and perform other compliance tasks. The NASD has noted an increasing number of inquiries regarding the propriety of paying referral fees. TRADE REPORTING AND COMPLIANCE ENGINE (TRACE), 6800. Notification to FINRA in Connection with the JOBS Act, 4521. Disclosures Required of Arbitrators, 13412. But see Charles Schwab & Co., Inc., SEC No-Action Letter (November 27, 1996). A: A solicitor of a Texas-registered investment adviser must register with the Texas Securities Commissioner and meet all state registration requirements contained in the Act and Rules.". The member's determination must be reasonable under the circumstances and should be reviewed periodically if payments to the unregistered person are ongoing in nature. 9See NASD Guide to Rule Interpretations, supra, note 3: "On an informal basis, the [NASD] has permitted 'one time' fees not tied to the completion of a transaction or opening of an account." The NASD believes that it is important to be able to regulate the flow of securities-related compensation from its members to unregistered persons in connection with the solicitation of securities transactions. Online trading app Public.com plans to offer traders to earn 4.8% yield with a Treasury Account on Public. Trade Reporting Participation Requirements, 7220B. Firm compliance professionals can access filings and requests, run reports and submit support tickets. Powers of the National Adjudicatory Council on Review, 9349. FINRA AWC (April 20, 2022). Payments by an investment adviser to broker-dealers in the form of rights to receive cash compensation upon the occurrence of specific corporate events (e.g., initial public offering of shares of the adviser) do not constitute "non-cash compensation" under NASD Rule 2830(l). (1) the payment of compensation for the referral of business by a member where the compensation is solely in connection with the underwriting or merger and acquisition business of the member; (2) the payment by a member of a fixed fee for the purchase of a listing of prospective customers; and. FINRA Amends Its Suitability, Non-Cash Compensation and Capital Acquisition Broker (CAB) Rules in Response to Regulation Best Interest. Legal & Compliance . Authority of Panel to Direct Appearances of Associated Person Witnesses and Production of Documents Without Subpoenas, 12514. RESPONSIBILITIES RELATING TO ASSOCIATED PERSONS, 4520. CLEARING, TRANSACTION AND ORDER DATA REQUIREMENTS, AND FACILITY CHARGES, 7200B. Assignment of Responsibility for General Ledger Accounts and Identification of Suspense Accounts, 4540. Compliance with Regulation NMS Plan to Implement a Tick Size Pilot Program, 6230. (My emphasis.) In addition, members would be permitted to pay fixed fees for referrals on an occasional basis, provided that the fee is minimal and that neither the entitlement to nor the amount of the fees are linked to the opening of an account, the execution of transactions, the volume of business, or in any other way tied to the outcome of the referral. Multiple MPIDs for Quoting and Trading in OTC Equity Securities, 6490. Proposed FINRA Rule 2040 . CODE OF ARBITRATION PROCEDURE FOR CUSTOMER DISPUTES, PART I INTERPRETIVE MATERIAL, DEFINITIONS, ORGANIZATION AND AUTHORITY, PART III INITIATING AND RESPONDING TO CLAIMS, PART IV APPOINTMENT, DISQUALIFICATION, AND AUTHORITY OF ARBITRATORS, PART V PREHEARING PROCEDURES AND DISCOVERY, PART VI HEARINGS; EVIDENCE; CLOSING THE RECORD, PART VII TERMINATION OF AN ARBITRATION BEFORE AWARD, PART VIII SIMPLIFIED ARBITRATION AND DEFAULT PROCEEDINGS, 13000. When, As and If Issued/Distributed Contracts, 11140. 1 Pursuant to the Rule, a federally registered investment adviser is prohibited from paying a . FINRA lays out the rules that govern brokers, overseeing over 4,200 securities firms and 624,000 registered representatives. NASD Rule 0120(j) defines the term "person" to include "any natural person, partnership, corporation, association, or other legal entity." Email: jtoleno@shufirm.com. Hearing Panel or Extended Hearing Panel: Recusal and Disqualification of Hearing Officers, 9234. The payment of a finder's fee or commission in connection with the sale of securities to a person who is not a broker registered with FINRA (formerly the NASD) is generally illegal. Discretionary Review by FINRA Board, 1017. Rule 4111 follows the same pre-emptive regulatory approach as Finra's Rule 3170, commonly referred as the taping rule, which became effective in 2014, and requires firms that employ a large . Displaying Priced Quotations in Multiple Quotation Mediums, 6439. General Reference to FINRA Rules Rule 0140 Rule 11860 Rule 1210 Rule 1220 Rule 1230 Rule 1240 Rule 2010 Rule 2070 Rule 2090 Rule 2121 Rule 2165 . Day-Trading Risk Disclosure Statement, 2272. Director's Discretionary Authority, 12409. Obligations of Members Who Discover Securities in Their Possession to Which They Are Not Entitled, 11810. Visit theAPI Developer Center for information on the FINRA Rulebook API. New Member Application and Interview, 1015. Review by National Adjudicatory Council, 1016. Minimum Quotation Size Requirements For OTC Equity Securities, 6434. Effect of Arbitration on FINRA Regulatory Activities; Arbitrator Referral During or at Conclusion of Case, 12200. Expungement of Customer Dispute Information under Rule 2080, 13902. Suspension and Termination by FINRA Action, 6370B. Visit Robert J Cleary's website. CONSOLIDATED AUDIT TRAIL COMPLIANCE RULE, 7000. Request for Hearing; Extensions of Time, Postponements, Adjournments, 9230. Rule 2040 prohibits member firms from directly or indirectly paying any compensation, fees, concessions, discounts or commissions to: . No Comments April 25, 2021 . The NASD believes that it is important to be able to regulate the flow of securities-related compensation from its members to unregistered persons. FINRA operates the largest securities dispute resolution forum in the United States, To report on abuse or fraud in the industry. Member Filing and Contact Information Requirements, 4518. 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