The Financial Industry Regulatory Authority issued guidance Monday on when heightened broker-dealer supervision of an "associated person" may be warranted. FINRA also is seeking comments on proposed rule amendments that would impose extra restrictions on member firms that employ brokers with a history of "significant" past misconduct.
FINRA's Regulatory Notice 18-15 reminds broker-dealers of their supervisory obligations when hiring registered reps with a history of past misconduct, and states that FINRA Rule 3110 (Supervision) requires member firms to establish and maintain a system to supervise the activities of each associated person "that is reasonably designed to achieve compliance with applicable securities laws and FINRA rules."
Comments are due by June 29 on Regulatory Notice 18-16, which seeks to impose further restrictions on member firms that employ high-risk brokers.