SIFMA Recommends Changes to FINRA Proposal on Home Offices

SIFMA recommended changes to FINRA's proposal to adopt supplementary material under Rule 3110 ("Supervision") "to treat a private residence at which an associated person engages in specified supervisory activities as a non-branch location." SIFMA urged FINRA to build in more flexibility as firms adjust to the new "reality" of a "fully alternative work environment."

In a Comment Letter, SIFMA supported the proposal and recommended changes to (i) reduce the criteria that would render a home office as an ineligible work location, (ii) eliminate some of the conditions applicable to supervisors of home offices, and (iii) eliminate the requirement to conduct regular physical inspections of all home offices. SIFMA advocated for FINRA to adopt a more flexible approach, such as allowing individual firms to determine if supervisory issues would arise from permitting designated persons to work from home.

In addition, SIFMA urged FINRA not to adopt a "one size fits all" standard for work from home supervision. SIFMA asserted that the differences among firms and business models would inadvertently have a greater impact on certain firms and could discourage people from taking on supervisory roles. SIFMA encouraged the SEC to consider FINRA's proposal simultaneously with FINRA's other home office proposals to identify and address any regulatory gaps.