Skip to main content

Publications

Nov 2011
16
November 16, 2011

New FINRA Customer Arbitration Disclosures and RR Responsibilities Take Effect December 5


New Predispute Customer Arbitration Disclosures

Broker-dealers using predispute arbitration agreements must give each client new disclosures under FINRA Rule 2268. The new disclosures reflect amendments to FINRA Rule 12904, requiring arbitrators to provide an explained decision to the parties in eligible cases if there is a unanimous request at least 20 days before the first hearing date. All predispute arbitration agreements entered into on or after December 5, 2011, must reflect this and other changes mandated by the new rule.

New FINRA Records Rule Requires Assigning RR Responsibilities

New FINRA Rule 4511 replaces NASD Rule 3110(a) and NYSE Rule 440 and adds some new requirements. Notably, among other things, the firm must explicitly designate the registered representative(s) responsible for each customer account (the "Responsible RR"), rather than assuming this is the representative who signed the customer's new account form. If representatives work in teams, then the firm must designate every Responsible RR on each account and detail the scope of their respective responsibilities. Firms must decide how to monitor and update these records when the Responsible RRs assignments change due to attrition, promotion, termination or other staffing changes. FINRA wants to avoid blame-shifting if a problem occurs. These changes will require new records and related procedures starting in less than three weeks.

For all the new requirements, see FINRA Regulatory Notice 11-19. If you have questions about regulatory changes affecting your firm or need help with them, please contact Dana Dawe, senior securities compliance consultant in the Broker Dealer and Investment Adviser Law and Regulation Group at Warner Norcross & Judd. Our team would be pleased to help you.

NOTICE. Although we would like to hear from you, we cannot represent you until we know that doing so will not create a conflict of interest. Also, we cannot treat unsolicited information as confidential. Accordingly, please do not send us any information about any matter that may involve you until you receive a written statement from us that we represent you.

By clicking the ‘ACCEPT’ button, you agree that we may review any information you transmit to us. You recognize that our review of your information, even if you submitted it in a good faith effort to retain us, and even if you consider it confidential, does not preclude us from representing another client directly adverse to you, even in a matter where that information could and will be used against you.

Please click the ‘ACCEPT’ button if you understand and accept the foregoing statement and wish to proceed.

ACCEPTCANCEL

Text

+ -

Reset