FINRA Board Of Governors Approves Three Rule Proposals To Strengthen Investor Protections And Modernize Information Delivery Requirements

At its final meeting of 2025, the Financial Industry Regulatory Authority, Inc. (FINRA) Board of Governors approved three rule proposals to advance FINRA’s objective of modernizing its regulatory framework while strengthening investor protections. A summary of the three approved rule proposals is as follows:

• Electronic Delivery as Default: This approved proposal would permit FINRA member firms to use electronic delivery as the default method of providing information to customers. According to FINRA Board Chair, Scott Curtis, such proposal aligns FINRA rules “with how many investors prefer to receive information in the digital age.” Customers would maintain their ability to choose paper delivery instead of electronic delivery of such information. FINRA plans to file proposed rule changes consistent with this proposal with the Securities and Exchange Commission (SEC).
• Customer Protection from Financial Exploitation: This approved proposal would extend the maximum temporary hold period on transactions where FINRA member firms suspect financial exploitation of senior or other vulnerable adults from 55 to 145 business days. The proposal would also establish a new temporary delay of up to five business days on transactions where there is a reasonable belief of fraud against a customer of any age. In its Regulatory Notice about such proposal, FINRA noted that the proposal is necessary because of the surge in fraud and financial exploitation in recent years, driven in part by technological advances. FINRA has requested comment on the approved rule proposal.
• Collective Trust Fund Flexibility: This approved proposal would provide more flexibility for collective trust funds (or collective investment trusts)¹ to access initial public offerings under FINRA’s new issue rules. The proposal would treat collective trust funds, which are generally used as investment options in qualified retirement plans, comparably to other types of pooled investment vehicles, which may help make collective trust funds a more competitive option for qualified retirement plans. FINRA plans to file this rule proposal with the SEC.

Footnote

1. Collective trust funds (or collective investment trusts) are pooled investment vehicles that combine the money of multiple investors into a single portfolio with a specific investment strategy.

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