FINRA releases FAQ on Rule 4111, Restricted Firm Rule
The Financial Industry Regulatory Authority has released frequently asked questions (FAQ) guidance on Rule 4111, according to an article in Think Advisor this week. The Restricted Firm Obligations rule sets extra requirements for broker-dealers with a significant history of misconduct, including firms with a high concentration of high-risk brokers.
As we reported in March, FINRA Rule 4111 became effective January 1, and the regulator will begin the process to determine which broker-dealers fall into the category of a “restricted firm” beginning on June 1.
According to the regulator, FINRA Rule 4111 (Restricted Firm Obligations) requires Restricted Firms to “deposit cash or qualified securities in a segregated, restricted account; adhere to specified conditions or restrictions; or comply with a combination of such obligations.”
The regulator has also posted Protecting Investors from Misconduct, a list of the firms that have been expelled over the last five years.
To learn more, please see: FINRA Rule 4111: Is your Brokerage Firm on the Naughty List?
The FAQ or Frequently Asked Questions lays out the criteria for a multi-step, annual process to determine if a firm is restricted or not. It also defines disclosure events and expelled firm association categories, among others.
FINRA is a not-for-profit organization that – working under the supervision of the SEC – actively engages with and provides essential tools for investors, member firms and policymakers, according to its website.
It also operates the largest securities dispute resolution forum in the United States, and has extensive experience in providing a fair, efficient and effective venue to handle a securities-related dispute. FINRA dispute resolution is accomplished through arbitration and mediation.
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Tags: FINRA attorney, FINRA lawyer, investment fraud attorney, Rule 4111, securities attorneys, securities fraud lawyers Last modified: April 18, 2022