The coronavirus pandemic (COVID-19) and resulting changes to everyday life has permeated seemingly every facet of society. Thus, it is not surprising that FINRA is providing temporary relief for member firms from compliance with certain rules and regulations. The relief is focused solely on specific identified rules and regulations found on the FINRA website. https://www.finra.org/rules-guidance/key-topics/covid-19/faq FINRA states that additional guidance and relief may be adopted as needed.
The now modified temporary rules pertain to issues such as advertising regulation, broker-dealer registration and Rule 4530 reporting requirements, among other issues. The accompanying FAQs represent FINRA’s current guidance on these and other particular topics.
For instance, the section as to business continuity planning asks whether members and associated persons are permitted to use remote offices or telework arrangements during the COVID-19 pandemic. In citing to Regulatory Notice 20-08, FINRA states that, “in an effort to mitigate the impacts of a pandemic, a member may consider employing methods such as social distancing, travel restrictions, revised sick leave policies, special pandemic leave time, or specialized seating plans for densely populated floors or buildings.” Working from home or a backup or recovery location are particularly identified as possible remote arrangements. However, FINRA cautions that it still expects the 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.
As another example, FINRA posted numerous FAQs related to supervision. Among the directives therein relates to supervisory review of correspondence. FINRA advises that a firm may choose to direct or forward firm mail that would ordinarily be delivered to the branch to an associated person’s residence but, the expectation remains that the “firm must ensure that it has implemented a supervisory structure reasonably designed to supervise the activities of its associated persons, including implementing controls for the handling of customer correspondences received so that a principal may complete the appropriate review.”
When appropriate, FINRA will publish a Regulatory Notice announcing a termination date for the regulatory relief that will provide member firms with time to make necessary operational adjustments. In the interim, FINRA’s FAQs remain a necessary reference page for evolving member obligations.