FINRA Rule 4111 (Restricted Firm Obligations)

FINRA Rule 4111 establishes an annual process by which FINRA designates as “Restricted Firms” member firms that present a high degree of risk to the investing public, based on numeric thresholds of firm-level and individual-level disclosure events.  Restricted Firms have significantly higher levels of risk-related disclosure events than their similarly sized peers. FINRA may impose new obligations on a Restricted Firm, including a requirement to deposit cash or qualified securities in a segregated, restricted account, and other conditions and restrictions that are necessary or appropriate for the protection of investors and in the public interest. 

Information that a firm is currently designated as a Restricted Firm will display on the firm’s BrokerCheck reports, while that firm is designated as a Restricted Firm. This information is intended to alert investors so they may research more carefully the background of such firm.

For more information about Rule 4111, see FINRA’s Protecting Investors from Misconduct key topic page and Regulatory Notice 21-34 (FINRA Adopts Rules to Address Firms with a Significant History of Misconduct).