Securities & Exchange Commission Approves FINRA Request for Changes to Remote Office Supervisory Rules
On April 14, 2023, the Financial Industry Regulatory Authority, Inc. (“FINRA”) filed with the Securities and Exchange Commission (“SEC”) the proposed rule change to adopt a voluntary, three-year remote inspections pilot program to allow eligible member firms to elect to fulfill their obligation under paragraph (c) (Internal Inspections) of FINRA Rule 3110 (Supervision) by conducting inspections of eligible branch offices, branch locations remotely without an on-site visit to such locations, subject to specified safeguards and limitations (the “Pilot”).
The proposed rule change was published for public comment in the Federal Register on May 4, 2023, and the Commission received thirteen comment letters in response to the Notice, including one from the Public Investor Advocate Bar Association (PIABA).
PIABA argued that less supervision is historically never a positive thing for individual investors and this proposal will only open the door for more abuse with corresponding customer losses. Alas, the comments fell on deaf ears and the pilot program was approved by the SEC (read the full text of the approval).