Report from FINRA Board of Governors Meeting – December 2020

Board Approves Rule Proposals, Reaffirms Financial Guiding Principles and Appoints NAC, SFAC and Regional Committee Members

WASHINGTON – FINRA’s Board of Governors met on Dec. 2-3. During the meeting it approved three rule proposals, reaffirmed FINRA’s Financial Guiding Principles, appointed members to the National Adjudicatory Council (NAC) and the Small Firm Advisory Committee (SFAC), received the results of recent SFAC and Regional Committee elections, and received several operational updates.

As is customary for the last meeting of the year, the Board discussed FINRA’s finances and other long-term planning. The Board also reviewed FINRA’s financial performance from 2020 and approved the self-regulatory organization’s 2021 proposed budget, scheduled to be published in the coming months. In addition, the Board conducted its annual review of FINRA’s Financial Guiding Principles, first implemented two years ago.

“FINRA’s Financial Guiding Principles are the backbone of our long-term financial planning and guide how we manage our resources to achieve our critical mission,” said FINRA CEO Robert Cook.

During the December meeting, FINRA staff presented operational updates on several topics, including the implementation of the Securities and Exchange Commission’s (SEC’s) Regulation Best Interest, the status of FINRA’s 529 plan self-reporting initiative and ongoing zero-commission "sweep" examinations, and the progress of the Consolidated Audit Trail (CAT).

The Board also nominated several members to the SFAC—which ensures that issues of particular interest and concern to small firms are effectively communicated to and considered by FINRA—and to the NAC, which hears appeals of or reviews FINRA disciplinary cases and maintains the organization’s Sanction Guidelines. The Board also received an update on recently concluded Regional Committee and SFAC elections. The new members of all three groups will be announced via a mid-December Election Notice.

“The level of insight and engagement these groups bring to FINRA reflect a key benefit of the self-regulatory model,” said FINRA Chairperson Eileen Murray. “We welcome the new members and look forward to their involvement.”

The next FINRA Board of Governors meeting is scheduled for March 3-4, 2021.

Rulemaking

The Board approved three rule proposals:

• Proposed Amendments to Enhance the Continuing Education Program – The Board approved filing with the SEC proposed amendments to FINRA Rules 1210 and 1240 to enhance FINRA's continuing education (CE) program. The amendments would, among other things, require registered persons to complete the Regulatory Element of the CE program every year rather than every three years, and would allow individuals who terminate their registrations to reregister for an extended period without retaking the required examinations if they maintain their CE requirements during this period.
• Proposed Amendments to FINRA Rules Regarding Security-Based Swaps – The Board approved filing with the SEC proposed amendments relating to the application of FINRA rules to members’ activities and positions in security-based swaps, in light of SEC rules for security-based swap dealers, including business conduct, margin, and financial and operational requirements.
• Proposal to Establish a Process to Appeal Staff Statutory Disqualification Determinations – The Board approved the filing with the SEC proposed amendments to the FINRA Rule 9000 Series to establish a process to appeal statutory disqualification determinations made by FINRA staff. The new process would provide individuals with the ability to challenge a FINRA decision that the person is subject to a statutory disqualification, without needing the support of a firm to do so.

For general information about FINRA’s rulemaking process, see www.finra.org/rules-guidance/rulemaking-process. More information regarding the Board's operations, including the membership and responsibilities of its committees, is available at www.finra.org/governance.

About FINRA

FINRA is a not-for-profit organization dedicated to investor protection and market integrity. It regulates one critical part of the securities industry—brokerage firms doing business with the public in the United States. FINRA, overseen by the SEC, writes rules, examines for and enforces compliance with FINRA rules and federal securities laws, registers broker-dealer personnel and offers them education and training, and informs the investing public. In addition, FINRA provides surveillance and other regulatory services for equities and options markets, as well as trade reporting and other industry utilities. FINRA also administers a dispute resolution forum for investors and brokerage firms and their registered employees. For more information, visit www.finra.org.