Welcome to the Regulatory Roundup. Each month, Eversheds Sutherland Investment Services attorneys review significant regulatory developments (including notable rulemakings and guidance from securities regulators) from the previous month that are of interest to retail broker-dealer and investment adviser firms.
FINRA Streamlines Guidance on Transfers of Customer Accounts by Negative Consent
- On February 6, FINRA filed Regulatory Notice 26-03 (RN 26-03), which reduces burdens associated with bulk transfers or assignments of customer accounts. Historically, firms seeking to transfer accounts without affirmative customer consent had to submit draft negative-consent letters to FINRA staff for review and wait for a “no objection” response before sending them to customers. Effective April 1, 2026, FINRA will discontinue this routine staff review of draft negative-consent letters and permit members to send such letters to customers without first obtaining a “no objection” response from FINRA staff.
- Despite this procedural change, FINRA reiterates through RN 26-03 that negative consent is permissible only in limited circumstances – generally tied to firm operational or structural changes and only where appropriate notice and safeguards protect customers. RN 26-03 also provides a summary of effective practices, minimum disclosures and other considerations regarding the use of negative consent. More detail on FINRA’s guidance can be found in our recent legal alert.
FINRA Proposes Allowing Performance Projections in Communications
- On February 10, FINRA filed proposed amendments to FINRA Rule 2210 with the SEC that would permit broker-dealers to include projections of performance or targeted returns in their communications. Rule 2210 currently prohibits such projections, which has led to disparities between broker-dealer communications and those permitted under the investment adviser Marketing Rule.
- To qualify for the exception, the proposal would require broker-dealers to: (1) adopt and implement written policies and procedures reasonably designed to ensure that the communication is relevant to the likely financial situation and investment objectives of the intended audience of the communication; (2) have a reasonable basis for the criteria used and assumptions made in calculating the projected performance or targeted return; and (3) provide sufficient information for investors to understand the criteria and assumptions made in calculating the projected performance (including fees and expenses) along with the risks and limitations of using the projection.
- FINRA notes that the proposal is not intended to allow firms to use projections or targeted returns in communications intended for general circulation. However, the proposal does not prohibit a firm from including projections or targeted returns in communications with retail investors.
FinCEN Grants Exceptive Relief from the Requirement to Identify and Verify Beneficial Owners at Each Account Opening
- On February 13, the Financial Crimes Enforcement Network (FinCEN) issued an order granting exceptive relief from the requirement to identify and verify the beneficial owners of a legal-entity customer each time the customer opens a new account. FinCEN explained that the action reflects its commitment to modernizing the Bank Secrecy Act framework while maintaining strong safeguards against illicit finance.
- Under the order, a covered financial institution must identify and verify beneficial owners only when: (1) a legal-entity customer first opens an account; (2) the institution has knowledge of facts that call into question the reliability of previously obtained beneficial owner information; or (3) as otherwise required by the institution’s risk-based procedures for ongoing customer due diligence.
FINRA Publishes New Quarterly Regulatory Policy Agenda
- On February 25, FINRA published its new Quarterly Regulatory Policy Agenda, intended to help FINRA members track FINRA’s progress and priorities as it undertakes its “FINRA Forward” rule modernization initiative. The Policy Agenda contains three tables, the first covering FINRA’s current areas of focus, the second highlighting active rule filings and the third focusing on recently approved or immediately effective rule filings.
- Regarding FINRA’s current priorities, the Policy Agenda highlights, among other things: (1) guidance regarding the payment of transaction-based compensation to personal services entities under SEC staff no-action guidance (expected to be filed with the SEC in Q1 2026) (2) a proposal to facilitate electronic delivery of information to customers under FINRA rules (expected to be filed with the SEC in Q2 2026); (3) a proposal to amend “certain time periods and terminology” pertaining to branch offices and residential supervisory locations (expected to be filed with the SEC in Q3 2026); (4) a proposal to address the Remote Inspections Pilot Program (expected to be filed with the SEC in Q3 2026); and (5) a proposal to modernize supervision rules (expected to be addressed in or after Q4 2026).
- FINRA intends to update the Policy Agenda on a quarterly basis.
FINRA Raises the Gift Limit and Codifies Longstanding Guidance
- On February 27, the SEC approved FINRA’s proposal to amend Rule 3220 (Influencing or Rewarding Employees of Others), with the primary effect of raising the annual gift limit from $100 to $300 per person. This change also updates the gift limits found in Rules 2310, 2320, 2341 and 5110.
- Additionally, the amendments alter how certain gifts are valued: while current rules require broker-dealers to use the greater of cost or market value, the new rule will generally require gifts (except for tickets) to be valued at their cost. Tickets to sporting or other events must be valued at the higher of cost or face value. The amendments will also incorporate established FINRA guidance and interpretations as Supplementary Material within Rule 3220, covering topics like business entertainment-related gifts, aggregation of gifts, exemptions for personal gifts (such as wedding or bereavement gifts), de minimis gifts, promotional or commemorative items and donations related to federally declared disasters.
- On February 27, FINRA filed Regulatory Notice 26-05, announcing an effective date for the amendments of March 30, 2026.
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