May 11, 2021

Volume XI, Number 131

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May 11, 2021

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May 10, 2021

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FINRA Updated and New Supervision FAQ for Rule 3120 and Rule 3120 Reports

On April 7, the Financial Industry Regulatory Authority (FINRA) issued updated Supervision Frequently Asked Questions to clarify differences between the Rule 3120 Report and the Rule 3130 Report. FINRA also drafted a new Frequently Asked Question to address how member firms can change the date on which their Rule 3130 annual certification is due.

FINRA provided additional information on the following questions:

  1. What is the difference between the FINRA Rule 3120 report and the FINRA Rule 3130 report?

FINRA provides additional clarification that the Rule 3130 report identifies the processes a firm has in place, at the time of the CEO’s certification, to establish, maintain, review, test and modify its written compliance policies and written supervisory procedures. Whereas, the Rule 3120 report requires member firms to conduct a look back of their system of supervisory controls and testing and to provide to their senior management (no less than annually) a report that: (1) details the manner, method and review for testing and verifying that a firm’s system of supervisory policies and procedures are reasonably designed to achieve compliance with applicable rules and laws; (2) provides a summary of the test results and significant gaps found; and (3) identifies the changes a firm made or will need to make to its supervisory procedures in order to address deficiencies found through its testing.

  1. What are the timetables for the FINRA Rules 3120 and 3130 reports and the Rule 3130 certification?

FINRA provides an updated table, including frequency, time period covered by a report and party to submit a report to, for Rules 3120 and 3130.

  1. How can member firms change the date on which their Rule 3130 annual certification is due?

FINRA issued a new FAQ on changing the recertification date for Rule 3130. FINRA notes that the date may be changed by a firm certifying any time before the one-year anniversary of its most recent certification. This will require the firm to certify more than once within the one-year period. However, the following year, the annual certification would be due on or before the new date.

FINRA’s full FAQ for Supervision.

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©2021 Katten Muchin Rosenman LLPNational Law Review, Volume XI, Number 99
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About this Author

Susan Light, Katten Law Firm, Finance Law Attorney, New York
Partner

Susan Light focuses her practice on financial services regulatory matters. She counsels broker-dealers, hedge funds, investment banks and financial services clients on enforcement issues involving the Securities and Exchange Commission (SEC), Financial Industry Regulatory Authority (FINRA), other self-regulatory organizations (SROs) and state and federal regulatory authorities. She has particular experience related to sales practice issues, financial and operational issues, anti-money laundering, crowdfunding, cybersecurity, and cryptocurrencies.

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212-940-8599
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