As the coronavirus (“COVID-19”) epidemic and its impact on the United States market continues to evolve, the Financial Industry Regulatory Authority, Inc. is granting “temporary” relief to broker-dealers and registered securities firms in its issuance of Regulatory Notice 20-08, reminding FINRA-member firms of their business continuity planning duties and obligations during the pandemic. Specifically, FINRA announced the following areas of relief for its members.
Postponement of Arbitrations: FINRA administratively postponed and is rescheduling all in-person arbitration and mediation proceedings scheduled through May 1, 2020. Specifically, FINRA announced:
In response to the evolving coronavirus disease 2019…FINRA has decided to administratively postpone all in-person arbitration and mediation proceedings scheduled through May 1, 2020. If you have an in-person hearing or mediation session that is postponed as a result of this decision, you will be contacted by FINRA staff to reschedule or discuss remote scheduling options.
Please note that this decision does not affect other case deadlines. All case deadlines will continue to apply and must be timely met unless the parties jointly agree otherwise.
We recognize that this decision may cause inconvenience and we do not make it lightly. We are taking this preventative action out of an abundance of caution, in the interest of public safety. The well-being of our FINRA employees, arbitrators, stakeholders and communities is of paramount importance.
Regulatory Filings and Responses to FINRA Inquiries, Matters, and Investigations: FINRA acknowledged that firms may have difficulty in making timely regulatory filings or responding to regulatory inquiries or investigations, and noted that member firms requiring extra time should seek extensions from their Risk Monitoring Analysts. FINRA also noted that it may waive late fees based on the particular circumstances of a firm.
Emergency Office Relocations: FINRA stated that if broker-dealer offices are relocated to emergency locations that are not registered with FINRA as branch offices or regular non-branch locations, the member firm should use its best efforts to provide written notification to its FINRA Risk Monitoring Analyst. FINRA, however, reminded member firms that while a pandemic may create exigent circumstances that result in emergency relocations, firms should take into account the risks associated with sharing office space with another entity (e.g., protecting investor/customer privacy, information security, or recordkeeping considerations) and take steps to mitigate risks during the emergency relocation.
Telework Arrangements and Supervision of Individual Brokers: FINRA acknowledged that the use of remote offices or telework arrangements may necessitate the adoption of alternate methods to reasonably supervise the activities of brokers, financial advisors, and other associated persons. FINRA further noted that currently scheduled on-site inspections of branch offices potentially may be postponed.
Cybersecurity: FINRA reminded firms to continue to focus on cybersecurity. FINRA stated that firms must “remain vigilant in their surveillance against cyber threats” and emphasized the heightened risk of cyber-crimes due to employees’ alternate or remote working arrangements.
Form U4 and Form BR: FINRA is temporarily suspending the requirement to maintain updated Form U4 information regarding office of employment addresses for registered persons who temporarily relocate due to COVID-19. In addition, member firms are not required to submit branch office applications on Form BR for any newly opened, temporary office locations or space-sharing arrangements established as a result of recent events.