FINRA Proposes Incorporating NASD Rule Regarding Background Investigations into Rulebook

FINRA filed with the SEC a proposed rule change to incorporate NASD Rule 3010(e) regarding background investigations into new FINRA Rule 3110(e) ("Responsibility of Member to Investigate Applicants for Registration").

The proposed rule change is intended to streamline and clarify the rule language, and adds a provision to require members to adopt written procedures that are "reasonably designed" to verify the accuracy and completeness of the information contained in an applicant's Form U4.

Additionally, the proposed rule change adds Supplementary Material .15 ("Temporary Program to Address Underreported Form U4 Information") to FINRA Rule 3110 to establish a temporary program that will issue refunds to members for Late Disclosure Fees, assessed for the late filing of responses to Form U4 Question 14M and subject to specified conditions.

See:Text of Proposed Rule Change.