BD Law Blog - by Georgia Securities Lawyer Joel Beck

FTC Delays Enforcement Date of "Red Flags" Rule

The FTC recently announced that it is delaying its enforcement date of the Red Flags Rule until November 1, 2009.  See FINRA's webpage on the Red Flags rule for further information relevant to broker-dealers, including a template for written procedures relating to the rule and a FINRA podcast relating to the rule. 

FINRA Rolls Out Series 79 "Investment Banking Representative" Registration Requirements

FINRA announced in Regulatory Notice 09-41 the new registration category for investment banking representatives.  The new registration category becomes effective on November 2, 2009, when recently enacted changes to Registration Rule 1032 become effective. 

Current Series 7 representatives who are engaged in investment banking activities covered by Rule 1032(i) (eff. date 11/2/09) may "opt-in" to the new Series 79 registration as an investment banking representative, up to May 3, 2010.  After this date, representatives who engage in investment banking work as set forth in Rule 1032(i) must take and pass the Series 79 exam, or obtain a waiver from FINRA. 

Importantly, general securities principals who wish to supervise activities covered under 1032(i) must obtain the Series 79 registration themselves, either by opting into the registration before May 3rd, or by taking and passing the test. 

Firms should go ahead and review the requirements of Rule 1032(i) before its effective date, and plan for registering its investment banking representatives and supervisors during the opt-in period, as well as amending the firm's written supervisory procedures, if needed, relating to registration requirements both for investment banking representatives and supervisors, as well as training registration staff on the new requirements.