Finra has proposed additional amendments to the rules governing communications with the public in what has become a marathon of rule-making changes that need to be approved by the Securities and Exchange Commission.
Broker-dealers and advisors dealing closely with broker-dealers should review the latest amendments to see if they feel comment is necessary and to keep up with the possible changes that will eventually be adopted, warned Bingham McCutchen LLP, a law firm specializing in financial industry litigation and regulation.
Bingham issued an alert on the fact that the SEC has extended the comment period for proposed rule changes until December 7. In an unusual move, the SEC asked for additional comments on the new amendments proposed by Finra, as well as on a series of other issues it outlined.
The regulation changes apply to broker-dealers and others who fall under Finra jurisdiction.
The rule changes will streamline the categories and definitions of communication with the public. Following a public comment period this summer, Finra proposed additional amendments. It is these amendments on which the SEC is providing additional time for public comment.
After hearing public comments, Finra proposed such things as revising the disclosure standards for public appearances and broadening the category of people whose financial interests must be disclosed to the public.
The SEC also asked for public comments on the scope of the definition of institutional investor, the requirements that are applicable to internal communications and public appearances and the requirements for those communications prepared by research department personnel, among other things.
The entire rule-making procedure on the proposed changes, which started in mid-2009, stems from the desire by the SEC to reconcile NASD and NYSE regulations. It will reduce the categories of communications to institutional and retail communications and correspondence from what were previously six categories.
It is important for those affected to track the changes as they are being considered in order to be prepared to meet the new regulations once they are implemented, says Michael R. Weissmann of Bingham, who represents national and regional broker-dealers, investment advisors and registered representatives before the SEC, Finra and state regulators.