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FINRA Issues Guidance to Broker-Dealers on Coronavirus

Simms Law, P.C. June 14, 2022

In wake of the global coronavirus outbreak, the Financial Industry Regulatory Authority (“FINRA”) recently issued guidance to broker-dealers on preparing for risks associated with the pandemic. In addition to providing temporary relief from certain regulatory requirements in response to this widespread health crisis, FINRA recommends that broker-dealers: 

Review Their Business Continuity Plans 

FINRA recommends that firms review their business continuity plans to ensure they are sufficient to address the potential effects of the coronavirus. Such plans should be reasonably designed to enable firms to meet their existing obligations to customers and address their existing relationships with other counterparties and broker-dealers. When reviewing their plans, firms should consider the potential ways in which the coronavirus may affect operations. Issues to consider include staff absenteeism, the use of remote offices or telecommuting arrangements, transportation or travel limitations, and technology interruptions. Firms should also ensure that emergency contact information with FINRA is up to date. 

Consider Allowing Personnel To Telecommute

In order to mitigate the effects of the coronavirus, FINRA recommends that firms consider allowing employees to work from home. However, when doing so, firms must implement a system that allows for the reasonable supervision of personnel. FINRA also recommends that firms test the use of remote offices or telecommuting arrangements prior to activating their business continuity plans. 

Be Aware Of Increased Cybersecurity Risks

Telework arrangements can increase the risk of data breaches and other cyber events. In addition, heightened anxiety among personnel and general confusion about the pandemic makes broker-dealers more vulnerable than usual to cybersecurity threats. Therefore, firms must remain cognizant of the increased risk of cyber threats during this confusing time and take steps necessary to protect data.

Prepare For Communications Disruptions

Finally, it is likely that firms will experience increased online activity and call volume as a result of the coronavirus. Therefore, firms should review their business continuity plans regarding customer communications to ensure that all clients will have access to their securities and funds in the event that there is a significant business disruption. And if the virus results in the inability of registered representatives to personally serve clients, FINRA encourages firms to place information on their websites indicating whom affected clients may contact regarding trades and account access.  

Fort Lauderdale financial advisor representation lawyers  

At Simms Law, P.A., we represent financial advisors who’ve been accused of breaking securities laws, rules, and regulations. Our representation addresses a wide range of issues, including compensation issues, the expungement of disclosures through FINRA expungement proceedings, raiding-related claims, and matters pertaining to transitioning between firms. If you are a financial professional and need representation in any of these areas or have general questions about FINRA compliance, please contact us by phone or through one of the contact forms on our website to schedule a free consultation.