FINRA To Extend Remote Inspections to June 30, 2022

Morgan Lewis - All Things FinReg
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Morgan Lewis - All Things FinReg

FINRA is proposing to extend the ability of firms to have remote inspections until June 30, 2022. As discussed in the rule filing, FINRA Rule 3110.17 provide firms the option of satisfying their inspection obligations under Rule 3110(c) remotely for calendar years 2020 and 2021, subject to specified conditions. The rule was to automatically sunset on December 31, 2021. FINRA has extended the rule in light of the COVID-19 delta variant, inconsistent vaccination rates, and an uptick in infections. The filing includes a request for immediate effectiveness, with the rule change being operative on January 1, 2022.

FINRA is only extending the date on which the rule is applicable. It is not amending its substantive requirements, which include that firms must amend or supplement their written supervisory procedures for remote inspections, use remote inspections as part of an effective supervisory system, and maintain the required documentation. Of note, FINRA stated that the additional period of time would also enable FINRA to further monitor the effectiveness of remote inspections and their impacts—positive or negative—on firms’ overall supervisory systems in the evolving workplace. It is unclear whether the emerging COVID-19 mu variant will result in an additional extension of time.

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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.

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