FINRA Set to End Temporary Remote Inspection Relief with New Rules

Posted on March 15th, 2024 at 11:52 AM
FINRA Set to End Temporary Remote Inspection Relief with New Rules

From the desk of Jim Eccleston at Eccleston Law

The Financial Industry Regulatory Authority (FINRA) announced that it will conclude its temporary relief from in-person inspection requirements, implemented due to the COVID-19 pandemic, on May 31.

According to AdvisorHub, two new rules approved by the Securities and Exchange Commission (SEC) in November will replace this temporary relief. Effective June 1, the first rule alters the definition of a residential supervisory location, extending the inspection cycle for home offices from annually to once every three years.

The second rule establishes a remote inspection pilot program starting July 1, allowing certain firms to conduct virtual exams of broker offices. Firms can enroll in the pilot from June 1 to June 26. Beginning June 1, firms can treat brokers' offices as residential supervisory locations and must submit a list of these locations by October 15.

AdvisorHub reports that some firms, like Morgan Stanley, have allowed brokers to work from home for up to 90 days annually. FINRA advises those firms to assess whether an increase in remote locations necessitates approval as a material change. FINRA’s notice did not specify the threshold for a material change, but FINRA has promised additional guidance.

The development of these rules began in the summer of 2022. Despite objections from investor advocates and state securities regulators, the SEC approved them, citing consistency with broader obligations to supervise for fraud and investor harm. The North American Securities Administrators Association (NASAA), representing state regulators, later supported the rules.

 

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.

Tags: eccleston, eccleston law, finra, sec

Return to Archive

TESTIMONIALS

Previous
Next

If the regulators are after you, and are trying to make a case against you, and you are going to contest their allegations against you, make sure you have the best securities industry defense lawyers, Eccleston Law Firm. My case was spun into a combination of penalties including fines, cash settlements, CE courses and suspension. They were the best I have seen in action. When all was said and done, they had done their magic, my situation was negotiated and settled with a simple "letter of caution" and a case closed without action. It is the most important legal business decision you will ever make, make it Eccleston Law.

Rick R.

LATEST NEWS AND ARTICLES

March 13, 2025
Congress Considers Expanding the Accredited Investor Definition

A recent congressional hearing examined potential reforms to the accredited investor definition, a critical threshold determining who can participate in private market investments.

March 12, 2025
GPB Capital Investors May Receive Some Compensation Under Proposed Distribution Plan

GPB Capital Holdings investors have not received returns on their investments since 2018. According to InvestmentNews, after years of litigation, a court-appointed receiver has submitted a plan to return funds to the 17,000 investors who purchased $1.8 billion in GPB limited partnerships.

March 11, 2025
Former CNBC Analyst Pleads Guilty to $2.7 Million Securities Fraud Scheme

James Arthur McDonald Jr., a former financial advisor and frequent CNBC guest analyst, has agreed to plead guilty to securities fraud, admitting to defrauding investors out of at least $2.7 million, as reported by ThinkAdvisor. The felony charge carries a maximum sentence of 20 years in federal prison.