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The purpose of this paper is to provide selected Financial Industry Regulatory Authority (FINRA) Regulatory Notices and Disciplinary Actions issued in June, July, and August 2012.

The paper provides FINRA Regulatory Notice 12‐29, Communications with the Public, and Notice 12‐38, Short Interest Reporting.

Notice 12‐29: the SEC has approved FINRA's proposed rule changes to adopt a new set of communication rules that become effective February 4, 2013. They address communications in three categories: institutional communication, retail communication, and correspondence. Among other things, the rules cover approval, review and recordkeeping requirements; content standards; and guidelines for public appearances. Notice 12‐38: the SEC approved amendments to FINRA Rule 4560 to codify the requirement that member firms report only “gross” short interest existing in each proprietary and customer account (rather than net positions across accounts) and clarify that member firms' short interest reports must reflect only those short interest positions that settled.

These FINRA notices are selected to provide a useful indication of regulatory trends.

The paper aims to explain the new Financial Industry Regulatory Authority (FINRA) rules governing communications with the public approved by the Securities and Exchange Commission (SEC) on March 29, 2012.

The following are explained: categories of communication, pre‐use approval and record‐keeping requirements, filing requirements, content standards, use of investment company rankings in retail communications, requirements for the use of bond mutual fund volatility ratings, requirements for the use of investment analysis tools, communication with the public regarding securities futures, communication with the public about collateralized mortgage obligations, and the implementation date for the rules.

While the new FINRA rules are based on the current provisions of the NASD Rules and Interpretive Materials they replace, there are some notable changes with regard to the communication categories, public appearances, and the approval, review and recordkeeping requirements.

Practical guidance is provided from experienced securities lawyers.

To summarize recent FINRA guidance on social media and digital communications published in Regulatory Notice 17-18.

The intention was to provide a brief summary of the recent FINRA guidance on social media and digital communications published in Regulatory Notice 17-18 along with previous guidance in Regulatory Notices 10-06 and 11-39.

The new guidance focuses on a number of areas of digital communications including text messaging, personal communications, hyperlinks and sharing, native advertising, testimonials and endorsements, correction of third-party content and BrokerCheck links.

Firms should review this new guidance alongside existing FINRA guidance and their current social media and digital communications practices. Where firms observe deficiencies in their existing practices, adjustments should be made before they find themselves the subject of a FINRA investigation, examination or enforcement action.

Practical explanation by experienced financial services lawyers.

In April 2017, FINRA issued a regulatory notice addressing the use of social media and digital communications by broker-dealers. The notice expanded on previous FINRA guidance on these topics. This article provides clarity regarding how social media and digital communications fit within the requirements of various FINRA rules and provides guidance to firms and their registered representatives.

The principal topics addressed by FINRA’s regulatory notice are: (a) text messaging, (b) personal versus business communications, (c) third-party content and hyperlinks, (d) native advertising, (e) testimonials and endorsements and (f) links to BrokerCheck. This article presents an overview of each of these topics, respectively.

Under recordkeeping requirements, firms must ensure that they are able to retain communications made through text messaging and chat services. Business communications, which relate to the products or services of the firm, are subject to filing and content requirements, while personal communications are not. Under certain circumstances, third-party posts on social media sites established by the member and testimonials may be attributable to the firm. Native advertising, while permissible, must comply with content requirements. Firm-created electronic applications do not have to provide a link to BrokerCheck.

Firms and their registered representatives will gain a better understanding of what is permissible pursuant to FINRA and SEC rules as they communicate digitally and via social media.

To analyze the June 9, 2017 Financial Industry Regulatory Authority, Inc. (“FINRA”) interpretive letter permitting the use of Related Performance Information in continuously offered closed-end registered investment company sales materials distributed solely to institutional investors.

Provides background, including the application of FINRA Rule 2210, and explains the conditions under which fund marketing materials may contain Related Performance Information.

While the interpretive letter will not result in a fundamental shift in the Industry’s approach to providing Related Performance Information of open- and closed-end funds to institutional investors, it also represents FINRA’s ongoing recognition that communications provided solely to institutional investors do not raise the same investor protection concerns as communications provided to retail investors.

Expert guidance from experienced investment management and investment fund lawyers.

The purpose of this summary is to provide excerpts of selected Financial Industry Regulatory Authority (FINRA) regulatory notices issued from September to November 2008.

The paper provides excerpts from FINRA Regulatory Notice 08‐54, Guidance on Special Purpose Acquisition Companies; Regulatory Notice 08‐62, Limit on Close Case Submissions; 08‐66, Retail Foreign Exchange; and 08‐70, FINRA Investigations.

Notice 08‐54: Special purpose acquisition companies (SPACs) are shell companies that raise capital in initial public offerings (IPOs) for the purpose of merging with or acquiring an operating company. Notice 08‐62: Effective November 24, 2008, FINRA will limit the circumstances under which parties may make submissions to arbitrators in closed cases. Notice 08‐66: The retail over‐the counter foreign currency exchange (retail forex) market is opaque, volatile and risky. Broker‐dealers who engage in forex business with their retail customers must comply with the FINRA rules that apply to those activities. Notice 08‐70: FINRA is issuing this guidance to apprise firms of the circumstances in which extraordinary cooperation by a firm or individual may directly influence the outcome of an investigation.

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 www.finra.org

The purpose of this summary is to provide excerpts of selected Financial Industry Regulatory Authority (FINRA) regulatory notices and disciplinary actions issued in July and August 2009 and a sample of disciplinary actions during that period.

The paper provides excerpts from FINRA Regulatory Notice 09‐42, Variable Life Settlement Transactions; 09‐49, Conflicts of Interest; 09‐52, Trade Reporting; and 09‐53, Non‐traditional ETFs.

(09‐42) FINRA is concerned about variable life settlements because they involved materially different factors and raise materially different issues than more widely held securities such as stocks or bonds. (09‐49) Rule 2720 prohibits a member firm with a conflict of interest from participating in a public offering, unless the nature of the conflict is prominently disclosed and certain other specific requirements are met. (09‐52) Effective January 11, 2010, firms that execute OTC trades in equity securities during the hours that a FINRA trade reporting facility is closed must report the trade within 15 minutes of the opening of the facility. (09‐53) Effective December 1, 2009, FINRA is implementing increased customer margin requirements for leveraged ETFs and uncovered options overlaying leveraged ETFs.

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

To explain the significance of a recently issued interpretive letter in which FINRA staff agreed to permit the use of pre-inception index performance data by passively managed, registered open-end investment companies.

FINRA recently issued an interpretive letter extending previously issued guidance by permitting passively managed open-end registered investment companies including separately-managed series of a business trust to use pre-inception index performance data in Institutional Communications.

The 2019 Letter is an important shift in how FINRA staff views PIP data in Institutional Communications by acknowledging that passively managed open-end funds should be treated in a similar manner as passively managed exchange-traded funds. This shift will be a welcome development for FINRA member firms wishing to include PIP data in marketing materials for the passively managed open-end funds they distribute.

Practical guidance from experienced investment management and broker-dealer lawyers.

The purpose of this summary is to provide excerpts of selected Financial Industry Regulatory Authority (FINRA) Regulatory Notices and Disciplinary Actions issued in April, May, and June 2010.

The paper provides excerpts from FINRA Regulatory Notice 10‐18, Master Accounts and Sub‐Accounts; 10‐22, Regulation D Offerings; 10‐23, Trade Reporting and Compliance Engine (TRACE); 10‐24, Trade Reporting; 10‐27, Customer Complaint Reporting; and 10‐30, Trading‐Pause Pilot Program; provides summaries of selected disciplinary actions.

(10‐18) If a firm has notice that the sub‐accounts of a master account have different beneficial ownership (but does not know the identities of the beneficial owners) or the firm is privy to facts and/or circumstances that would reasonably raise the issue as to whether the sub‐accounts, in fact, may have separate beneficial owners, then the firm must inquire further and satisfy itself as to the beneficial ownership of each such sub‐account. (10‐22) A broker‐dealer has a duty – enforceable under federal securities laws and FINRA rules – to conduct a reasonable investigation of securities that it recommends, including those sold in a Regulation D offering. (10‐23) On February 22, 2010, the SEC approved the second major proposed expansion of TRACE to include Asset‐backed Securities as TRACE‐Eligible Securities, to require the reporting of Asset‐backed Securities transactions and to establish reporting fees. (10‐27) Starting on July 1, 2010, the beginning of the third calendar quarter, firms must use revised and new product codes to report statistical information regarding written customer complaints relating to annuities and life settlement products. (10‐30) On June 10, 2010, FINRA began a pilot program in which it will halt trading otherwise than on an exchange with respect to securities included in the S&P 500® Index where the primary listing market has issued a trading pause due to extraordinary market volatility. Selected disciplinary actions: FINRA announced that it has settled charges with two additional firms relating to the sale of auction rate securities (ARS) that became illiquid when auctions froze in February 2008. FINRA announced that it has fined five broker‐dealers a total of $385,000 for the illegal sale of more than 8 billion shares of penny stock on behalf of their customers.

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 www.finra.org.

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.

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.

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.

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