The Financial Industry Regulatory Authority announced that the agency has adopted amendments to Rule 8312, the FINRA BrokerCheck Disclosure, to release information on BrokerCheck as to whether a particular current or former member firm is currently designated as a restricted firm.
FINRA says Rule 4111, regarding restricted firm obligations, was designed to protect investors and the public interest by “strengthening tools available to FINRA to address the risks posed by member firms with a significant history of misconduct.”
The rule establishes an annual process to identify and designate as “restricted firms” member firms that present “a high degree of risk to the investing public.” FINRA says this multi-step, annual process imposes on restricted firms a restricted deposit requirement or, in addition or in the alternative, conditions or restrictions on the member firm’s operations that are necessary or appropriate to protect investors and the public interest.
FINRA believes the rule also entices member firms to change behaviors and activities, either to avoid being designated or re-designated as a restricted firm.
Information that a firm is a restricted firm will display on BrokerCheck via a firm’s summary and detailed BrokerCheck reports while that firm is designated as a restricted firm.
The amendments to Rule 8312 become effective on June 1, 2023.
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