Guidance

Background

In response to the March 2017 Special Noti

The Sales Practice Complaint Report is a quarterly report that displays trends in complaints with Sales Practice problem codes as reported to FINRA pursuant to FINRA Rule 4530. Note: prior to July 1, 2011, this report showed complaints reported pursuant to NASD Rule 3070(c) or NYSE Rule 351(d). For the purposes of the report, Sales Practice Complaints are evaluated against the number of representatives registered with the firm and the sales revenue of the firm.

While Americans as a whole are feeling less financial stress, making ends meet remains a daily struggle for women, millennials, African-Americans, Hispanics and those without a high school education, according to the NFCS, one of the largest and most comprehensive financial capability studies in the United States. The study measures four key components of financial capability—making ends meet, planning ahead, managing financial products and financial knowledge and decision making.

In June 2009, FINRA issued Regulatory Notice 09-31 to remind firms of their sales practice obligations relating to leveraged and inverse exchange-traded funds (ETFs). At the same time, the Investment Industry Regulatory Organization of Canada (IIROC) issued guidance to the Canadian industry that is substantially similar to our Notice. In July we released a compliance podcast concerning the Notice and some of the issues that it raised.

Background

FINRA’s highest priority when it identifies misconduct is to seek restitution for harmed investors. However, like many other self-regulatory organizations in the securities industry, FINRA also imposes fines on its members to discourage further misconduct. Fine amounts are based on public, pre-established guidelines and the facts and circumstances of the individual case. FINRA does not target any minimum amount of fines to be collected.

In Regulatory Notice 23-17, FINRA announced its decision, effective November 30, 2023, to discontinue collecting INSITE data, pursuant to Rule 4540, at this time.  As a result, effective November 30, 2023, the Customer Debits Report was retired from the FINRA Report Center.

The following FAQ is provided to facilitate firms' compliance with FINRA Rules 5190 (Notification Requirements for Offering Participants), 6275 (Withdrawal of Quotations) and 6435 (Withdrawal of Quotations in an OTC Equity Security in Compliance with SEC Regulation M). A comprehensive overview of these rules and related guidance is set forth in Regulatory Notice 08-74 and Regulatory Notice 12-19.

In addition to the Small Firm Helpline, FINRA has implemented other programs for small firms:

The TRACE Quality of Markets Report Card for Securitized Products is a monthly status report for the reporting of transactions in Asset Backed Securities, Mortgage Backed Securities and other similar securities, collectively defined as "Securitized Products", to the Trade Reporting and Compliance Engine (TRACE). Firms are required to report trades in accordance with established FINRA rules and regulations.

The Cross-Market Equities Supervision Manipulation Report is a tool designed to provide firms feedback on exceptions that were generated based on the firm’s order entry and trading activity in a given surveillance period. The report covers two distinct analyses; layering and Cross-Market Quote Spoofing. This report is produced on a monthly basis.

This report provides a summary of the review activity for the filings submitted during the selected and previous reporting periods.

If you have questions regarding the content of this report, please contact FINRA Corporate Financing at (240) 386-4623.

Deals Filed During the Selected Period

Background

Until mid-2017, FINRA maintained two distinct enforcement teams within the organization—one handling disciplinary actions related to trading-based matters found through our market surveillance and trading examination programs, and the other handling cases referred from other regulatory oversight divisions within FINRA, such as sales practice examinations and our Office of Fraud Detection and Market Intelligence. Through FINRA360, we analyzed stated firm concerns that these dual programs sometimes resulted in duplication of effort and inconsistency of results.