After substantial debate and comments between FINRA and its membership, FINRA recently issued Notice to Members 11-33 and notified membership that covered persons will have to qualify and register as an Operations Professional, pursuant to FINRA Rule 1230(b)(6) (“The Rule”), effective October 17, 2011. “Covered persons” include: (i) senior management with direct responsibility over covered functions; (ii) any person designated by senior management as a supervisor, manager or other person responsible for approving or authorizing work, including work of other persons, in direct furtherance of each of the covered functions; and (iii) persons with the authority or discretion materially to commit a firm's capital in direct furtherance of the covered functions or to commit a firm to any material contract or agreement (written or oral) in direct furtherance of the covered functions.
The Rule states that any person who is deemed to be a “covered person” and engages in any of the “covered functions” listed, will be required to qualify and register as an Operations Professional.
When determining who is a covered person, firms will have to establish risk management guidelines and procedures to assist the firm in determining if individuals are in fact covered. Thus, individuals whose activities are limited to performing a function ancillary to a covered function, or whose function is to serve a role that can be viewed as supportive of or advisory to the performance of a covered function (e.g., internal audit, legal or compliance personnel who review but do not have primary responsibility for any covered function), or whose activities are of a clerical or ministerial nature or are in a support role, will not have to register as an Operations Professional.
Courtesy of the LeGaye Law Firm
Michael Schaps, Co-Author
Daniel E. LeGaye, Co-Author
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