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Summary of selected FINRA regulatory notices, March‐May 2011

Henry A. Davis (Editor of Journal of Investment Compliance, based at Henry A. Davis & Co., Financial Research and Consulting, Washington, DC, USA)

Journal of Investment Compliance

ISSN: 1528-5812

Article publication date: 13 September 2011




The purpose of this summary is to provide excerpts of selected Financial Industry Regulatory Authority (FINRA) Regulatory Notices and Disciplinary Actions issued in March, April, and May 2011.


The paper provides excerpts from FINRA Regulatory Notice 11‐15, Low‐Priced Equity Securities; 11‐19, Books and Records; 11‐21, Fidelity Bonds; 11‐24, Customer Order Protection; 11‐26, Financial Responsibility.


11‐15: Firms are reminded to consider the risks associated with low‐priced equity securities when extending credit in a strategy‐based or portfolio margin account. 11‐19: The new rules require member firms to make and preserve certain books and records to show compliance with applicable securities laws, rules and regulations; in general, the new rules streamline, strengthen and clarify existing requirements. 11‐21: FINRA Rule 4360 requires each member firm that is required to join the Securities Investor Protection Corporation (SIPC) to maintain blanket fidelity bond coverage with specified amounts of coverage based on the firm's net capital requirement, with certain exceptions. 11‐24: FINRA Rule 5320 generally provides that a member firm that accepts and holds an order in an equity security from its own customer or a customer of another broker‐dealer without immediately executing the order is prohibited from trading that security on the same side of the market for its own account at a price that would satisfy the customer order, unless it immediately thereafter executes the customer order up to the size and at the same or better price at which it traded for its own account. 11‐26: New FINRA Rules 4150, 4311, 4522 and 4523, in combination with the consolidated financial responsibility rules that the SEC approved in November 2009, enhance FINRA's authority to execute effectively its financial and operational surveillance and examination programs.


These are direct excerpts designed to provide a useful digest for the reader and an indication of regulatory trends. The FINRA staff is aware of this summary but has neither reviewed nor edited it. For further detail as well as other useful information, the reader should visit



Davis, H.A. (2011), "Summary of selected FINRA regulatory notices, March‐May 2011", Journal of Investment Compliance, Vol. 12 No. 3, pp. 56-76.



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