Selected FINRA notices and disciplinary actions, July‐August 2011

Abstract

Purpose

The purpose of this paper is to provide selected Financial Industry Regulatory Authority (FINRA) regulatory notices and disciplinary actions issued in July and August 2011.

Design/methodology/approach

The paper provides Regulatory Notice 11‐31, July 2011, Credit Default Swaps: Interim Pilot Program on Margin Requirements for Credit Default Swaps; Notice 11‐37, July 2011, Trading Halts Due To Extraordinary Market Volatility: Trading Pause Rule Expanded to All NMS Stocks; Notice 11‐38, August 2011, Application of the SEC's Financial Responsibility Rules in Response to the Downgrade of US Long‐term Credit Rating by Standard & Poor's; Notice 11‐39, August 2011, Social Media Websites and the Use of Personal Devices for Business Communications: Guidance on Social Networking Websites and Business Communications; and selected FINRA disciplinary actions in July and August 2011.

Findings

Notice 11‐31: FINRA has extended the implementation of Rule 4240 so that it will expire on January 17, 2012; the Rule established an interim pilot program with respect to margin requirements for certain transactions in credit default swaps. Notice 11‐37: Beginning August 8, 2011, the trading pause pilot rule – currently applicable only to securities included in the S&P 500® Index, the Russell 1000® Index and a list of selected exchange‐traded products (ETPs) – will be expanded to include all National Market System (NMS) stocks. Notice 11‐38: FINRA staff has confirmed with the staff of the SEC that this ratings action by Standard & Poor's does not alter the net capital treatment of these government securities under SEA Rule 15c3‐1(c)(2)(vi)(A) and does not affect the definition of “qualified security” under SEA Rule 15c3‐3(a)(6). Notice 11‐39: Responds to questions regarding the application of Regulatory Notice 10‐06, January 2010, providing guidance on the application of FINRA rules governing communications with the public to social media sites and reminding firms of the recordkeeping, suitability, supervision and content requirements for such communications.

Originality/value

These are direct excerpts designed to provide a useful digest for the reader and an indication of regulatory trends.

Citation

Davis, H.A. (2011), "Selected FINRA notices and disciplinary actions, July‐August 2011", Journal of Investment Compliance, Vol. 12 No. 4, pp. 57-70. https://doi.org/10.1108/15285811111188216