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California Securities Lawyer Update: FINRA No Longer Will Require B-D's to Supervise Unaffiliated RIA's

By Erwin J. Shustak, Esq. of Shustak Reynolds & Partners, P.C. posted on Thursday, March 1, 2018.

Erwin J Shustak, Esq.
619.696.9500 ext. 109
[email protected]

Under a FINRA proposal released this week, broker-dealers may no longer be required to supervise the activities of their registered representatives performed at unaffiliated RIA firms. The rule, if adopted, will substantially reduce the burden of B-D’s monitoring the outside business activity of the firm’s brokers performed at unrelated RIA firms.  The B-D still would have to approve the representative performing outside business activities at the RIA firm, but, once approved, the B-D would not have any obligation to supervise the work its representative does at that RIA.

FINRA explained the reason for the proposed rule as reducing the supervisory obligations of B-D’s which had been causing “headaches” for FINRA members.  The proposal was advanced by FINRA at its December meeting.  Some B-D’s praise the proposal; others are concerned about the potential loss of income they have been receiving for supervising outside RIA work by their reps.

Shustak Reynolds & Partners, P.C. focuses its practice on securities and financial services law and complex business disputes. We represent many broker-dealers, registered representatives, investment advisors, investors and businesses. For more information, or if you or your company require counsel in these areas, contact us today for a confidential, complimentary consultation.

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