FINRA Provides Guidance to Firms on Sales Requirements of Pension Income Stream Products (FINRA Reg. Notice 16-12)
FINRA published a regulatory notice in which it offered guidance on the sale of "pension income stream products." The notice provided an overview of (i) products that are commonly referred to as pension loans or advances, (ii) the applicability of securities laws to those products, and (iii) firms' supervisory obligations where their personnel are involved in selling the products. In particular, FINRA emphasized the obligations of broker-dealers:
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to determine whether a pension income stream product falls within the definition of a "security" under the federal securities laws;
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to treat the sale of a pension income stream product, if it is a "security" and an associated person sells it outside the scope of his or her employment at a firm, as a private securities transaction subject to FINRA Rule 3280 and not an outside business activity subject to FINRA Rule 3270;
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to adopt the specific procedures and training of firm personnel with respect to the sale of such products; and
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to comply with applicable state securities laws regarding pension income stream products.