Small Firms - Regulatory Relief Update (3/20/20)

IMPORTANT UPDATES FOR FINRA MEMBER SMALL FIRMS

FINRA executive staff is working with the SEC to obtain the SEC's approval for FINRA to provide wholesale regulatory relief to member firms on some rule obligations (such as filing deadlines).

Until and unless the *SEC* grants that permission to FINRA to do the right thing for member firms, FINRA cannot do the right thing for member firms. This is very important to understand and I haven't heard anyone else say this, so I am saying it. There is a chain of command: FINRA is our regulator and the SEC is FINRA's regulator.

I know how upset the small firm community is that FINRA is not providing wholesale regulatory relief in this time of national crisis because several hundred of you have contacted me directly to express your extreme displeasure with FINRA's apparent lack of understanding and action. As an industry member, I too am frustrated as our FOCUS etc deadlines loom, but it is important for everyone to understand that nothing gets done without the SEC approving the relief and that FINRA is working hard trying to obtain the SEC's authorization.

(I recognize how unpopular it is in our community to defend FINRA, but the facts are the facts and I want you to know them -- even if it's an unpopular thing for me to do.)

REGULATORY RELIEF

On Tuesday, there was a call with Robert Cook and some members of his executive staff. In that call, we conveyed the dire situation small firms are experiencing and we submitted an 18-item list of requested regulatory relief.

Many of our items had already been identified by FINRA staff/management and some were rules/areas they had not considered yet. Robert and others on the call were very appreciative of our underscoring the need for relief in the areas they had already identified, as well as our having presented some new rules/areas for them to address.

The take-away here is your small firm advocates are actively engaged with FINRA at the highest level; we are working diligently with FINRA to identify and obtain the relief we all need.

FOCUS RELIEF

IF YOU HAVE NOT FILED YOUR FOCUS REPORT AND YOU NEED A FILING EXTENSION, CALL YOUR RISK COORDINATOR *TODAY* TO REQUEST AN EXTENSION ON TUESDAY'S FOCUS FILING DEADLINE. Please think about how much of an extension you need prior to contacting them. If you need a 30-day extension, don't ask for a 15-day extension. Know what you need and ask for it.

Also, due to time constraints for extensions, if your Risk Analyst/Coordinator does not respond in a timely fashion, call your district office. Also, while waiting for a call back from your Coordinator, send an email with your written request for "an extension of xx days for our FOCUS filing". The key point here is, take action to protect your firm.

FORM CUSTODY, SSOI, OBS, etc. FILINGS

Contact your Risk Coordinator or the relevant department at FINRA to request extensions. Do not delay, make the call if your firm needs an extension.

EMERGENCY CONTACTS

If you are unable to update the FINRA Contact System with any temporary contact information for your firm's 2 emergency contacts, please be sure to send your Coordinator an email with this information or call him/her.

EXAMINATIONS (CYCLE)

FINRA has committed to being extremely thoughtful and accommodating during this time of COVID-19 where (non cause-related) examinations are concerned. If your firm is notified that a remote examination is being initiated and if your firm is not in a position currently to be able to meet the time and man-power obligations included in a regulatory exam, YOU MUST CALL YOUR EXAM MANAGER AND COMMUNICATE YOUR SITUATION TO THEM AND REQUEST AN EXTENSION.

Markets are in disarray and clients are not only panicking over their/their family's personal safety and health, some are also panicking over their financial safety and health. Reps are under a great deal of stress and this is a time when all resources should be focused on clients (and employees). Additionally, mistakes happen in this type of environment and every firm's operational, compliance, supervisory and financial control resources need to be dedicated to servicing our clients and ensuring the proper running of our firms. It is reasonable, based on these and other variables we are dealing with as small firms, to request and obtain an exam extension.

NB: If you are a firm with a notable disciplinary history, do not expect to receive extensions. Like, any extensions for anything. Customer protection remains FINRA's #1 mission.

FORM U4 / FORM BR

FINRA has temporarily suspended the requirement to maintain updated Form U4 information regarding office of employment address for registered persons who temporarily relocate due to the pandemic. In addition, member firms are not required to submit branch office applications on Form BR for any newly opened temporary office locations or space-sharing arrangements established as a result of recent events.

EMERGENCY OFFICE RELOCATIONS

If you relocate personnel to a temporary location that is not a registered branch, use best efforts to provide notice in writing (email) to your Coordinator/Risk Analyst. Include the location address, names of who is working from that location and a phone number, if possible.

CYBER

At a minimum, please make sure you have installed all of the latest patches and updates on your computers, VPN, and overall network (servers, etc.)!

Initiate two-factor authentication for everyone who is permissioned to access your systems remotely!

Remind all of your employees to remain vigilant in this time of crisis and DO NOT OPEN emails or attachments from unknown sources or from emails they do not recognize. (Look at all emails and their extensions prior to opening an attachment or clicking on a link!)

CAT DEADLINE EXTENSION

The SEC has extended the CAT registration/testing deadline to May 20th. (It was Mid-April.)

MEMBERSHIP APPLICATION PROGRAM

Pre-filing meetings and membership interviews for new and continuing membership applications will be conducted via video conference.

If you need an extension on your new or continuing membership application, contact your MAP examiner and make that request. (Again, know what you need and ask for it specifically. This is no time to be shy, only you know what you and your firm are going through and it's up to you to advocate for what your firm needs.)

POSTPONEMENT OF ALL IN-PERSON ARBITRATION AND MEDIATION HEARINGS

Until further notice, all in-person arbitration and mediation hearings are postponed. Please note though that this does NOT affect other case deadlines. If you require extensions, you must contact FINRA directly to request such extensions.

POSTPONEMENT OF ALL OHO HEARINGS

With the exception of Expedited Proceedings, FINRA has postponed all hearings of Disciplinary Proceedings scheduled through April. Any questions, contact your Case Administrator.

EXAM WINDOWS

FINRA is extending all enrollment windows that are currently open and scheduled to expire by the end of May. Additionally, if you or someone in your firm had a window expire prior to this week, and during the pandemic, please contact FINRA. They are going to work with firms/reps to not charge additional fees for rescheduling.

REG ELEMENT - CONTINUING EDUCATION

We have made the request for extensions on open CE windows and FINRA is reviewing our request.

SCAMMERS & THIRD-PARTY WIRES

While this is not advice of any kind (legal or otherwise), I would like to share my opinion on servicing third-party wire requests in this incredibly challenging environment.

Personally, I would not authorize one single third-party wire during this time of pandemic-related BCP activation, office dislocation, reps using different phones than they normally do (where voices may sound different than normal) and the unique stresses everyone involved in the financial transaction and execution chain is experiencing. Our wire parameters currently are restricted to standing instructions only, for the protection of our customers and our firm.

The decision whether to permit or suspend third-party wires is one that every small firm must make for themselves. I suggest every firm review this area and make an informed and deliberate decision regarding third-party wires in this time of market duress and global pandemic.

HERE ARE YOUR LINKS (won’t work on my website)

Watch FINRA.ORG for COVID-19/Coronavirus-related Updates

Read FINRA Notice 20-08 (Pandemic-Related Business Continuity Planning, Guidance and Regulatory Relief)

We are all facing unprecedented challenges as our country and the world grapples with coronavirus. No industry is immune and we are all trying to figure out how to keep ourselves, our families, our employees and our businesses safe and supported.

Our world is changing daily and as regulatory efforts/relief or relevant updates arise for small firms, I will endeavor to get them over to you. If you have additional people you would like me to add to my distribution list, please just send me their name, title, email address, and your firm name. I will add them right away.

I want you to know that you are not alone. As small business owners and operators, we sometimes feel as though we are, but you are not alone in this. Not only am I here, but so are your other small firm advocates (board and SFAC members) and industry consultants, all of whom are sitting at the center of what is happening in our community. Together, your small firm governors, members of the SFAC, and expert industry consultants - whose contributions to our effort to obtain relief for small firms have been invaluable, are all doing our very best to advocate for you and your firm in this time of crisis.

Please take care of yourself, your family, your employees and your customers. Help your neighbors and support your community -- our communities. In supporting one another, we will get through this.

My best,

Paige

Paige W. Pierce

(801) 949-5577 c

(801) 733-7711 m

paige@paige-pierce.com

***Quick note: I am joining McLaughlin Ryder Investments this month as President. Thrilled and honored, details to follow later.