SIFMA Backs FINRA Proposal to Consolidate OBA and PST Requirements

SIFMA supported FINRA’s proposal to consolidate requirements on outside business activities of registered persons and private securities transactions of associated persons into a new rule focused on "investment related" activities.

In a comment letter on the SEC proposal to adopt new FINRA Rule 3290 ("Outside Activities Requirements"), SIFMA endorsed the SEC's revised treatment of unaffiliated investment adviser activities, under which registered persons would provide prior written notice, but firms would not be required to approve, supervise, or maintain records of those activities. SIFMA contended that concerns about supervisory gaps were overstated, noting that investment advisers remain subject to SEC and state oversight. The proposed rule would replace existing FINRA Rules 3270 ("Outside Business Activities of Registered Persons") and 3280 ("Private Securities Transactions of an Associated Person"). 

SIFMA also welcomed clarifications designed to improve the rule’s workability, including limiting the required customer assessment to customers of the associated or registered person rather than any customer of the member firm. The association further supported explicitly excluding real estate transactions involving a primary residence and up to two secondary residences.

SIFMA emphasized that the new rule’s full benefits depend on conforming amendments to Form U4. It cautioned that unless FINRA, the SEC, and state regulators harmonize the form’s "other business" disclosure requirements with the new rule's narrowed scope, firms may hesitate to revise compliance policies due to misaligned reporting obligations. SIFMA urged regulators to act promptly to align the disclosure framework.