FINRA proposed new rules that would impose additional capital obligations on firms with a "significant history of misconduct" (i.e., "Restricted Firms"). These firms would be identified based on specific numeric disclosure-event thresholds. FINRA explained that the proposed additional measures are intended to address the heightened risks that Restricted Firms pose to investors, which "undermine confidence in the securities markets as a whole."
In particular, FINRA requested feedback on:
proposed Rule 4111 ("Restricted Firm Obligations"), which would require Restricted Firms to make deposits of cash or qualified securities that cannot be withdrawn without FINRA's written consent, or comply with other investor protection requirements; and
proposed Rule 9559 ("Procedures for Regulating Activities under Rule 4111") and amendments to existing Rule 9559 (which would be renumbered as Rule 9560) that would facilitate an expedited process for reviewing determinations under Rule 4111.
Comments must be submitted by July 1, 2019.
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.