FINRA Granted Wider Investigative Authority under Expanded Rule
A new FINRA rule, recently approved by the SEC, allows FINRA access to books and records about the outside business activities of its representatives. Amended rule 8210 gives FINRA the right to inspect any information in the “possession, custody or control” of a member firm or any associated person. In supplementary material, FINRA makes clear that it has access to records concerning outside business activities, private securities transactions, and “possible violations of just and equitable principles of trade, as well as other FINRA rules, MSRB rules, and the federal securities laws.”
OUR TAKE: The changes to 8210 give FINRA nearly unfettered access to any books and records related to the member’s business. Presumably, this would include the right to inspect records of a registered investment adviser deemed an outside business activity for representatives associated with the member firm.