Proposed FINRA Regulatory Changes Regarding Outsourcing That Require Attention

more+
less-

On March 29, 2011, the Financial Industry Regulatory Authority (FINRA) published for industry comment a proposed rule clarifying the scope of a member firm's obligations and supervisory responsibilities for functions or activities outsourced to a third-party.

The proposed Rule (FINRA Rule 3190 - Third-Party Service Providers) makes clear that:

• when a member firm outsources a function or activity related to its business as a regulated broker-dealer to a third-party service provider, it does not relieve the member firm of its obligation to comply with applicable securities laws and regulations, and FINRA and Municipal Securities Rulemaking Board (MSRB) rules;

• the member firm cannot delegate its responsibilities for, or control over, any outsourced functions or activities;

• a member firm must have supervisory procedures, including due diligence measures, to ensure that its arrangements with third party service providers are reasonably designed to achieve compliance with applicable securities laws and regulations, and FINRA and MSRB rules.

• The proposed rule also imposes additional restrictions and obligations that apply solely to a clearing or carrying member firm and its third-party service provider arrangements.

Please see full alert below for more information.

LOADING PDF: If there are any problems, click here to download the file.

Written by:

Published In:

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Loeb & Loeb LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »

All the intelligence you need, in one easy email:

Great! Your first step to building an email digest of JD Supra authors and topics. Log in with LinkedIn so we can start sending your digest...

Sign up for your custom alerts now, using LinkedIn ›

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.
×
Loading...
×