UNITED STATES: FINRA Adopts Amendments to FINRA Rule 8312

Wednesday May 10 2023

On 2^nd May 2023, the Financial Industry and Regulatory Authority (FINRA) announced that it has adopted amendments to Rule 8312 (FINRA BrokerCheck Disclosure) to release information on Broker Check as to whether a particular current or former member firm is currently designated as a Restricted Firm pursuant to FINRA Rules 4111 (Restricted Firm Obligations) and 9561.

Rule 4111 (Restricted Firm Obligations) is 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.

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 creates incentives for member firms to change behaviors and activities, either to avoid being designated or re-designated as a Restricted Firm. Rule 9561 establishes an expedited proceeding to implement Rule 4111.

BrokerCheck helps investors make informed choices about the brokers and member firms with which they conduct business by providing registration and disciplinary history to investors at no charge. FINRA requires member firms to inform their customers of the availability of BrokerCheck. To enhance the investor-protection benefits of Rule 4111, FINRA has amended Rule 8312 (FINRA BrokerCheck Disclosure) to release information on BrokerCheck as to whether a particular member firm or former member firm is currently designated as a Restricted Firm pursuant to Rules 4111 and 9561.

The new rule amendments become effective on June 1^st, 2023.

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