As COVID-19 disruptions unfold, FINRA has granted temporary relief regarding alternate working arrangements for broker-dealer employees.

By Dana G. Fleischman, Stephen P. Wink, Naim Culhaci, and Deric Behar

On March 9, 2020, the Financial Industry Regulatory Authority, Inc. (FINRA) issued Regulatory Notice 20-08 to members, reminding FINRA-member broker-dealer firms of their business continuity planning obligations during the pandemic and granting temporary regulatory relief to members in certain areas.

FINRA granted temporary relief in the following areas:

  • Remote Offices or Telework Arrangements: FINRA acknowledged that the use of remote offices or telework arrangements may necessitate the adoption of alternate methods to reasonably supervise the activities of associated persons. FINRA further acknowledged that scheduled on-site inspections of branch offices may need to be temporarily postponed during the pandemic.
  • Form U4 and Form BR: In keeping with long-standing guidance, FINRA stated that firms are not required to submit branch office applications on Form BR for any newly opened temporary office locations or space-sharing arrangements established as part of BCP plans resulting from recent events. FINRA also stated that it is temporarily suspending the requirement to maintain updated Form U4 information regarding office of employment address for registered persons who temporarily relocate due to COVID-19.
  • Regulatory Filings and Responses to FINRA Inquiries, Matters, and Investigations: FINRA acknowledged that firms may have difficulty in making timely regulatory filings or responding to regulatory inquiries or investigations, and stated that firms requiring extra time should seek extensions from their Risk Monitoring Analysts. FINRA added that it may waive late fees based on the particular circumstances of a firm.

In addition, FINRA is calling firms’ attention to the following areas:

  • Emergency Office Relocations: FINRA stated that if offices are relocated to emergency locations that are not registered as a branch office or regular non-branch locations, the member firm should use its best efforts to provide written notification to its FINRA Risk Monitoring Analyst.
  • Cybersecurity: FINRA reminded firms that, while focusing on pandemic resiliency and the health and safety of individuals, they should not lose sight of cybersecurity. FINRA stated that firms must “remain vigilant in their surveillance against cyber threats” and emphasized the heightened risk of system compromise due to employees’ alternate or remote working arrangements.

FINRA has also altered many of its business-as-usual routines in light of COVID-19. For example, it has decided to administratively postpone and reschedule all in-person arbitration and mediation proceedings scheduled through May 1, 2020, and is extending exam candidates courtesy cancellation of upcoming qualification exam appointments. Members with continuing education windows that are due to expire may also be eligible for an extension. Member firms can access FINRA’s updates on COVID-19 related issues here.