FINRA Files Amendment to Proposal on Residential Supervisory Location

FINRA proposed clarifying amendments and new definitions to its prior proposal to "treat a private residence at which an associated person engages in specified supervisory activities as a non-branch location."

As previously covered, the original FINRA rule proposal would make the location of a private residence subject to inspections on a regular periodic schedule. FINRA's proposal would adopt new Supplementary Material .19 ("Residential Supervisory Location") under FINRA Rule 3110 ("Supervision") to align with FINRA’s current residential exclusions. If adopted, FINRA said that the proposal would retain key safeguards for books and recordkeeping.

FINRA now proposes to amend its rule making by:

• amending the requirement for one year of supervisory experience at the member firm to include supervisory experience at an affiliated broker-dealer or adviser;
• clarifying the scope of the ineligibility criteria for associated persons subject to an investigation or proceeding for supervisory failures; and
• requiring firms to conduct risk assessments for each office or location before allowing the location to be designated as a "Residential Supervisory Location."