FINRA Proposes Remote Inspection of Branch Offices Where Low-Risk Activities Are Conducted

Oct 17, 2017 | Blog

At the FINRA Board of Governors Meeting that took place in late September 2017, the Board authorized publication of a Regulatory Notice soliciting comment on proposed amendments to FINRA Rule 3110 (Supervision) to provide FINRA member broker-dealer the flexibility to remotely conduct office inspections of “qualifying offices” where only low-risk activity takes place. Among other conditions, a “qualifying office” would be limited to no more than three associated persons—none of whom has a “disciplinary history” or is subject to statutory disqualification—and no customer funds or securities could be handled at the location. Under the proposal, a FINRA member broker-dealer that wishes to conduct remote inspections would be required to have policies and procedures reasonably designed to determine whether a location is eligible for remote inspection as a “qualifying office” and to assess whether a remote inspection of any such office is reasonable.

This proposed amendment, if ultimately approved, should free up valuable compliance resources to enable a broker-dealer to focus on high priority compliance issues.