FINRA Podcast: Rules Related to Supervision
FINRA released the fifth podcast in a five-part series about FINRA's new Consolidated Supervision Rules. This podcast focused on rules relating to new FINRA Rule 3110, as well as rules relating to supervisory control systems, holding customer mail, and tape-recording registered people.
The podcast discussed FINRA Rule 3120, which requires firms to identify principal(s) that are responsible for setting up, maintaining, and enforcing supervisory controls. FINRA reminded firms that the control policies must: (i) test and verify that the firm's supervisory procedures are "reasonably designed" to achieve compliance with applicable laws and regulations and (ii) create or amend supervisory procedures when needed. FINRA reminded firms that principals must submit a report that summarizes test results and necessary amendments to the supervisory policies and procedures.
The podcast then discussed FINRA Rule 3150, which allows firms to hold customer mail for a longer time if certain conditions are met, such as a customer providing written instructions requesting that the firm hold his or her mail for a specific time frame. However, FINRA stated that if the period is longer than three months, the instructions must include an "acceptable reason," noting that "convenience" is not an acceptable reason.
Finally, FINRA discussed Rule 3170, which requires firms that meet certain thresholds to record all telephone conversations between registered people and current and/or potential customers. FINRA clarified that the term "tape recording" includes, without limitation, any electronic or digital recording that meets the rule's requirements.
See: Transcript of FINRA Podcast; Podcast.Related news: FINRA Podcast: The Requirement to Conduct Internal Investigations into Red Flags Relating to Investment Banking - Part 4 (with Bondi Comment) (October 22, 2014); FINRA Podcast: Inspection Requirements - Part 3 (October 8, 2014); FINRA Podcast: Reviewing Correspondence, Communications and Complaints - Part 2 (September 24, 2014); FINRA Podcast: Primary Supervision Requirement- Part 1 (September 18, 2014).