FINRA updates its COVID-19 FAQs
As we reported in our Financial Services Alerts dated April 10, April 23 and June 8, FINRA has published a series of Frequently Asked Questions Related to Regulatory Relief Due to the Coronavirus Pandemic (FAQs) providing temporary relief from certain FINRA rules and requirements where compliance may be affected by the coronavirus disease 2019 (COVID-19) pandemic. FINRA continues to update the FAQs as events require. The latest updates extend several impending deadlines.
Fingerprint information
On March 20, the Securities and Exchange Commission (SEC) provided a temporary exemption until May 30, 2020, from the fingerprinting requirements of Securities Exchange Act Rule 17f-2 and, on May 27, extended it to June 30. Last week, the SEC issued an order extending the temporary exemption until a date that will be specified in a public notice that will be issued by SEC staff (the “Termination Date”). The Termination Date will be at least two weeks from the date of that SEC staff notice.
As a condition of the March 20 relief, the SEC required notice by May 30 of any person relying on the exemption. FINRA provided such notice on behalf of all of its members, their employees and associated persons, which remains in effect.
FINRA Rule 1010(d) authorizes FINRA to extend the 30-day period for submitting fingerprint information upon application and a showing of good cause. Consequently, FINRA members that submitted, or will submit, an applicant’s initial or transfer Form U4 between February 15, 2020 and the Termination Date will have until 30 days after the SEC’s Termination Date to submit the necessary fingerprint information. Non-registered associated persons who are nevertheless required to be fingerprinted (NRFs) will have the same 30-day period after the Termination Date to submit fingerprint information. Firms must maintain a record of the persons relying on this relief, including hire date and, if applicable, termination date.
Individual registration – verification of Form U4 information
FINRA Rule 3110(e) requires firms to have written procedures for verifying the accuracy and completeness of information contained in an applicant’s Form U4 within 30 calendar days of its filing with FINRA. This must include, at minimum, a search of reasonably available public records to verify such accuracy and completeness. FINRA states that if, due to the limitations and restrictions resulting from the pandemic, verification of information contained in a Form U4 filed with FINRA between February 15 and July 1, 2020 is not currently feasible or practical within the 30-day period, firms should document the information that could not be verified, the steps taken to verify it, and the reasons it could not be verified. FINRA also advises firms to make reasonable efforts to verify such information no later than July 31, 2020 and, if needed, to file amended Forms U4 to correct discrepancies.
Qualification examinations – temporary extensions of time; waiver requests
Because of ongoing issues relating to test centers, FINRA is further extending expiring qualification examination windows until August 31, 2020. FINRA will continue to assess this situation to determine whether additional extensions are necessary.
FINRA’s exam waiver process continues to operate normally.
Supervision – additional time for Rule 3120 reports and Rule 3130 certifications
FINRA originally provided that firms having annual deadlines between March 1 and May 1, 2020 for completing and submitting their Rule 3120 senior management reports, which evaluate supervisory control systems, would have until May 31, 2020. FINRA also provided that firms with deadlines for executing Rule 3130 certifications that fell between March 1 and May 1, 2020, would have through May 31 to complete them. These deadlines were later extended to June 30.
FINRA has now updated the relief to provide that firms with deadlines for submitting Rule 3120 reports falling between March 1 and July 1, 2020, will have until July 31 to complete and submit those reports, and firms with Rule 3130 certification deadlines falling between March 1 and July 1, 2020, will have until July 31 to complete them.
FINRA also noted that the CEO/Chief Compliance Officer meetings mandated by Rule 3130 may be conducted virtually.
If you have any questions regarding the FAQs, please contact one of the authors, your DLA Piper relationship partner, or a member of the DLA Piper financial services team.
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This information does not, and is not intended to, constitute legal advice. All information, content, and materials are for general informational purposes only. No reader should act, or refrain from acting, with respect to any particular legal matter on the basis of this information without first seeking legal advice from counsel in the relevant jurisdiction.
