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FINRA Adopts Restrictions on Registered Person becoming Customer Beneficiary or Trustee

FINRA adopted a rule restricting a registered person's ability to (i) become a beneficiary of a customer or (ii) hold a position of trust on behalf of a customer.

FINRA Rule 3241 ("Registered Person Being Named a Customer's Beneficiary or Holding a Position of Trust for a Customer") provides that where a broker-customer relationship exists, a registered person must decline being named (i) as a beneficiary of a customer's estate or (ii) being named as an executor, trustee, or holding a power of attorney or "similar position of trust for or on behalf of a customer." FINRA Rule 3241 does not apply where the customer is a member of the registered person's immediate family.

According to FINRA, the rule provides greater investor protection and consistency across member firms' policies.

FINRA Rule 3241 will become effective on February 15, 2021.

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Sub-Activity: 
Borrowing From or Lending to Customers
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