FINRA is seeking comments on a proposed rule change concerning the outside business activities of registered persons.
The proposed amendments would consolidate FINRA Rules 3270 ("Outside Business Activities") and 3280 ("Private Securities Transactions"). The proposal would (i) require registered persons to provide the firms that employ them with prior written notice of outside activities, (ii) reduce firms' obligations to perform risk assessment for certain activities so that firms could focus on activities likely to raise investor protection concerns, (iii) eliminate supervisory and recordkeeping obligations for many outside activities (including advisory activities at an unaffiliated third party), and (iv) hold a member responsible for approved activities that are dependent on a registered person's association with the member.
The proposal derives from a FINRA review of rules concerning business activities and the private securities transactions of members' employees.
FINRA is requesting comments on a number of issues, including:
- Alternative approaches and unaddressed economic effects of the proposal;
- Application to registered persons, rather than associated persons;
- Changes to members' obligation to conduct risk assessment; and
- Removal of general supervisory obligations as to certain outside activities.
Comments are due by April 27, 2018.
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