Selected FINRA notices and disciplinary actions, March‐May 2012

Abstract

Purpose

The aim is to provide details of selected Financial Industry Regulatory Authority (FINRA) Regulatory Notices and Disciplinary Actions issued in March, April and May 2012.

Design/methodology/approach

The paper provides Regulatory Notice 12‐17, April 2012, “Telemarketing: SEC Approves Consolidated Telemarketing Rule,” and Regulatory Notice 12‐25, May 2012, “Suitability: Additional Guidance on FINRA's New Suitability Rule”.

Findings

Notice 12‐17: FINRA Rule 3230 (Telemarketing) updates exiting NASD and NYSE rules that require member firms to maintain and consult do‐not‐call lists, limit the hours of telephone solicitations and prohibit members from using deceptive and abusive acts and practices in connection with telemarketing, and adopts provisions that are substantially similar to Federal Trade Commission (FTC) rules that prohibit deceptive and other abusive telemarketing acts or practices. Notice 12‐25: The new FINRA Rule 2111 requires, in part, that a broker‐dealer or associated person “have a reasonable basis to believe that a recommended transaction or investment strategy involving a security or securities is suitable for the customer, based on the information obtained through the reasonable diligence of the [firm] or associated person to ascertain the customer's investment profile.” In general, the new rule retains the core features of the previous NASD suitability rule, codifies several important interpretations of the predecessor rule and imposes a few new or modified obligations.

Originality/value

These are direct excerpts designed to provide a useful digest for the reader and an indication of regulatory trends.

Citation

Davis, H.A. (2012), "Selected FINRA notices and disciplinary actions, March‐May 2012", Journal of Investment Compliance, Vol. 13 No. 3, pp. 84-98. https://doi.org/10.1108/15285811211266182