FINRA has postponed all
in-person arbitration and mediation hearings through May 31, 2020.
The Financial Industry Regulatory Authority (FINRA) has issued new guidance and changes in response to the COVID-19 pandemic. Some of the updates include:
In-Person Arbitration and Mediation Hearings Postponed
FINRA has postponed all in-person arbitration and mediation hearings through May 31, 2020. FINRA is offering remote hearing services using Zoom and teleconference. The parties can jointly request a virtual hearing option or the panel may order the parties to proceed using a virtual hearing option.
Allowing Members to Use Remote Offices or Telework Arrangements
FINRA stated that, in efforts to mitigate the impacts of the pandemic, a member may use remote offices or telework arrangements (e.g., working from home or a backup or recovery location) for a broad range of employees. FINRA further stated that it expects a member to establish and maintain a supervisory system that is reasonably designed to supervise the activities of each associated person while working from an alternative or remote location during the pandemic, and to document any changes to its current written supervisory procedures.
Not Requiring Updated Form U4 or Form BR for Temporary Relocations, but Members Should Make Best Efforts to Notify FINRA
FINRA is temporarily suspending the requirement to maintain updated Form U4 information regarding office of employment address for registered persons who temporarily relocate due to COVID-19. In addition, members are not required to submit branch office applications on Form BR for any newly opened temporary office locations or space-sharing arrangements established due to the pandemic.
However, FINRA has stated that members should use best efforts to provide written notification to their FINRA Risk Monitoring Analyst as soon as possible after establishing a new temporary office or space-sharing arrangement, and to include at a minimum the office address, the names of each member involved, the names of registered personnel, a contact telephone number and, if possible, the expected duration. The notification should also indicate whether the member’s personnel will be sharing space with another entity, and if so, the type of business in which it is engaged (e.g., an affiliated investment adviser or an organization in the securities business).
FINRA Extends Certain Deadlines Due to COVID-19
Annual Assessments: Small firms (having no more than 150 registered persons) are permitted to treat the Gross Income Assessment and the Personnel Assessment, normally distributed in April and due upon receipt, as having been distributed August 1, 2020. Further, small firms that choose to do so will be allowed to pay 50 percent of the amount due on September 1, 2020, and the remaining 50 percent on December 1, 2020.
Fingerprint Information: FINRA is temporarily extending the time period for submitting fingerprint information under Rule 1010(d). Members that submitted, or will submit, an applicant’s initial or transfer Form U4 between February 15, 2020, and May 30, 2020, will have until June 29, 2020, to submit fingerprint information.
Continuing Education: FINRA is temporarily extending the time period for completing the Regulatory Element of CE. For any registered person whose 120-day window for completing the Regulatory Element is currently expired, or will expire, between March 16, 2020, and May 2020, the deadline will be extended through the same end date of May 31, 2020.
Annual Report: Any member that (1) meets the exemptive provisions in SEA Rule 15c3-3(k) or (2) files a Part IIA FOCUS Report is being provided a 30-calendar-day extension for submitting to FINRA their annual report related to fiscal years ending in January 2020 through March 2020. Further, the procedures set forth under Interpretation/01 under SEA Rule 17a-5(m)(1) are waived for purposes of this extension.
FOCUS Report: Members that meet the exemptive provisions in SEA Rule 15c3-3(k) or (2) file a Part IIA FOCUS report are being provided a 10-business-day extension for submitting any FOCUS report to FINRA related to a period ending in February 2020 through April 2020. Further, the written application and procedures required pursuant to SEA Rule 17a-5(a)(6) and the related Interpretations are waived for purposes of this extension. For any member that qualifies for the above extension, FINRA is providing a corresponding 10-business-day extension for any applicable supplemental FOCUS schedules required pursuant to FINRA Rule 4524.
Rule 3120 Report: Members whose annual deadline for submitting the report falls between March 1 and May 1, 2020, may take up to and including May 31, 2020, to complete and submit the report to their senior management required under Rule 3120 that details a member’s supervisory controls system.
Rule 3130 Certification: A member whose certification deadline falls between March 1 and May 1, 2020, may take up to and including May 31, 2020, to complete its certification. In addition, the required meetings between the CEO(s) and the CCO(s) to discuss the member’s processes may be conducted virtually.
Rule 4530 Report: FINRA Rule 4530(d) requires that each member report to FINRA statistical and summary information regarding written customer complaints by the 15th day of the month following the calendar quarter in which customer complaints are received by the member. Members have until May 31, 2020, to report to FINRA statistical and summary information regarding written customer complaints received by the member in the first quarter of 2020.
Qualification Examination Windows: Due to the temporary closing of the Prometric test centers, FINRA is extending expiring qualification examination windows until May 31, 2020. Individuals who were designated to function as principals under Rule 1210.04 prior to February 2, 2020, will be given until May 31, 2020, to pass the appropriate examination(s).
About Duane Morris
Duane Morris has created a COVID-19 Strategy Team to help organizations plan, respond to and address this fast-moving situation. Contact your Duane Morris attorney for more information. Prior Alerts on the topic are available on the team’s webpage.
For More Information
If you have any questions about this Alert, please contact Walter A. Saurack, James J. Regan, Sharon L. Caffrey, any of the attorneys in our Securities Litigation Group, any member of the COVID-19 Strategy Team or the attorney in the firm with whom you are regularly in contact.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.