FINRA rule 4530 will take effect on July 1, 2011. The new rule, part of FINRA’s consolidated rulebook process, adds to the reporting requirements currently found in NASD rule 3070 and New York Stock Exchange rule 351. Specifically, broker-dealers will soon be required to: (1) notify FINRA of certain regulatory, litigation, and related events; (2) make quarterly reports of customer complaints and (3) file copies of certain criminal actions, civil complaints, and arbitration claims with FINRA. Even if rule 4530 does not mandate the reporting of a particular event, there may be occasions when a broker-dealer will still want to notify the SEC of the information in order to foreclose a characterization of "original information" under the whistleblower provisions of Section 21F of the Securities Exchange Act of 1934.
In her article, "Self-reporting Is Getting Complicated: Balancing FINRA’s Rule 4530 and the SEC’s Whistleblowing Requirements" prepared for Complinet, K. Susan Grafton of Gibson Dunn discusses the new reporting requirements and their implications for broker-dealers.
Reprinted with permission from Thomson Reuters GRC, July 30, 2011 © 2011 Thomson Reuters.