FINRA provided7 additional guides on documentation, individual registration, qualification examinations and supervision, all in connection with the temporary relief provided to FINRA member firms due to the Coronavirus pandemic.
A FINRA member firm is required to document its reliance on any temporary relief from obligations in rules or requirements during the COVID-19 pandemic, such as new procedures that vary from its written supervisory procedures. If FINRA deems appropriate, FINRA will guide its member firms if, where and how to publicly disclose such reliance.
FINRA Rule 3110(e) (Responsibility of Member to Investigate Applicants for Registration) requires members to establish and implement written procedures reasonably designed to verify the accuracy and completeness of the information contained in an applicant's initial or transfer Form U4 no later than 30 calendar days after the Form U4 is filed with FINRA. It also requires each FINRA member to include in its procedures a search using reasonably available public records or a third-party service provider to verify the accuracy and completeness of the information contained in the applicant's initial or transfer Form U4. If verification of some of the information contained in an initial or transfer Form U4 filed with FINRA between February 15, 2020 and May 31, 2020 is not currently feasible or practical within the 30-day period following the submission of the Form U4 due to the COVID-19 outbreak, such FINRA member firm should (1) record which information could not be verified, the reason for the inability to verify and the steps it has undertaken to verify that information, (2) make reasonable efforts to verify the information contained in the Form U4 by no later than June 30, 2020 and (3) if necessary, file an amended Form U4 to correct any discrepancies.
FINRA Rule 1220(b)(3)(B) (Qualifications) allows eligible individuals to function as an Operations Professionals for 120 calendar days before having to pass the appropriate qualification examination. Due to the temporary closure of the Prometric test centers, FINRA has extended expiring qualification examination windows until June 30, 2020. Individuals who were designated to function as Operations Professionals under Rule 1220(b)(3)(B) prior to February 2, 2020 have until June 30, 2020 to pass the appropriate examination.
Due to the work-from-home arrangement and the lack of a central operations center for principal review during the coronavirus pandemic, a firm should direct or forward firm mail from a branch office to a principal's residence, and if not possible, to the residence of an associated person who is not a principal (e.g., a registered representative's residence). The firm, however, must continue to supervise the activities of its associated persons (e.g., handling of customer correspondences received, etc.) so that a principal may complete the appropriate reviews. A firm should document the revised procedures based on the foregoing and consider potential additional risks in the retention and reporting of customer complaints, the handling of customer non-public information and the possible net capital implications of checks received. Depending upon the activities conducted at a person's residence, the residence may qualify as a "branch office" under FINRA Rule 3110(f)(2) (Supervision). However, as provided in Regulatory Notice 20-08, a firm is not required to file a Form BR to register a temporary branch office resulting from an emergency relocation due to the coronavirus pandemic.
7 Available at https://bit.ly/2ZJB7zk.
Originally published May 28, 2020.
Originally published in REVERSEinquiries: Volume 3, Issue
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