FINRA reminded member firms of the new requirements in recently adopted FINRA Rule 3210, which governs accounts that are opened or established by associated persons at firms other than those at which they are employed. The new rule, which replaced NASD Rule 3050, specifies the particular information that the employee of a broker-dealer must provide to their employing firm regarding trades at an outside firm.
FINRA outlined the following rule provisions, among others, that affect members and associated persons:
- associated persons must obtain the prior written consent of their employers when opening an account;
- associated persons are presumed to have a beneficial interest in certain types of accounts;
- associated persons must notify the executing member, or other financial institution, in writing of their association with the employer member prior to opening or otherwise establishing accounts that are subject to the rule;
- if an account was opened or otherwise established 30 days prior to an associated person's association with the member, then that associated person must obtain the written consent of the member in order to maintain the account;
- employer members must consider the extent to which they will be able to obtain, upon written request, duplicate copies of confirmations and statements directly from non-member financial institutions;
- upon written request by the employer member, executing members must transmit duplicate copies of confirmations and statements, or the transactional data contained therein, with respect to accounts that are subject to the rule; and
- the requirements of FINRA Rule 3210 do not apply to transactions in (i) unit investment trusts, (ii) municipal fund securities, (iii) qualified tuition programs, (iv) variable contracts or the redeemable securities of companies registered under the Investment Company Act, (v) accounts that are limited to transactions in such securities, or (vi) monthly investment plan accounts.
The effective date of FINRA Rule 3210 will be April 3, 2017.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.