SEC Approves FINRA's Proposal to Adopt Rules 0190 and 2040 and Amend Rule 8311

The SEC approved a FINRA-proposed rule change to FINRA Rule 0190 ("Effective Date of Revocation, Cancellation, Expulsion, Suspension or Resignation") and FINRA Rule 2040 ("Payments to Unregistered Persons"), and to amend FINRA Rule 8311 ("Effect of a Suspension, Revocation, Cancellation, or Bar").

The new FINRA Rule 2040 governs members' payment of transaction-based compensation to unregistered persons, which incorporates NASD Rule 1060(b) ("Persons Exempt from Registration") and streamlines the provisions of NASD Rules 2410 ("Net Prices to Persons Not in Investment Banking or Securities Business") and 2420 ("Dealing with Non-Members") and Incorporated NYSE Rule 353 ("Rebates and Compensation") and Interpretations of Incorporated NYSE Rule 345 ("Compensation").

According to FINRA, the amended Rule 8311 will eliminate applicative provisions of NASD IM-2420-2 ("Continuing Commissions Policy"), and adopts the requirements of NASD IM-2420-1(a) ("Non-Members of the Association") as FINRA Rule 0190.

See: SEC Rule Approval; FINRA Rule Filing.Related news: FINRA Proposes Rule Change to Adopt Rules 0190 and 2040 and Amend Rule 8311 (Fed. Reg.) (October 1, 2014); FINRA Proposes to Adopt FINRA Rule 2040 ("Payments to Unregistered Persons") and Amend Rule 8311 ("Effect of a Suspension") (September 10, 2014).