FINRA Sets Effective Date for Rule Amendments on Disclosure of BrokerCheck's "Restricted Firm" Designations

FINRA set an effective date of June 1, 2023 for amendments to FINRA Rule 8312 ("FINRA BrokerCheck Disclosure") on the disclosure of BrokerCheck's designation of "Restricted Firms."

The rule change provides for public disclosure of member firms designated as a "Restricted Firm" as determined annually pursuant to FINRA Rule 4111 ("Restricted Firm Obligations") and FINRA Rule 9561 ("Procedures for Regulating Activities Under Rule 4111"). As previously covered, the amendments also provide for hyperlinks to (i) the rules that define what constitutes a "Restricted Firm" designation and (ii) assist in educating "unsophisticated retail investors to understand the importance of the disclosure and make an informed decision about working with such a firm."

FINRA noted that the effective date of June 1, 2023 is also the Evaluation Date for the second annual Rule 4111 cycle. Following the effective date, FINRA will release relevant information on BrokerCheck beginning with firms that are designated as Restricted Firms in the second cycle.