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Statement On FINRA Rule Regarding High-Risk Firms, SEC Commissioner Allison Herren Lee, SEC Commissioner Caroline A. Crenshaw, July 30, 2021

Date 30/07/2021

Today, the Commission approved FINRA’s proposed rule change to, among other things, impose additional obligations on FINRA member firms with a significant history of misconduct, as well as those firms that employ individual brokers with such histories (collectively “high risk firms”).[1]  We appreciate FINRA’s attention to these high risk firms because they raise important investor protection concerns.  We were pleased to see FINRA’s commitment to working with state securities regulators to share information regarding these firms.[2]  We are also pleased that FINRA’s Board recently approved a plan for a separate filing to disclose the identities of high risk firms to the public, which it expects to file promptly.[3]  A firm’s high-risk status is important information and will help investors make informed choices about the firms they select.  We intend to monitor this important investor protection issue and will evaluate whether additional steps may be needed to address recidivist firms and brokers. 

 

[1]  See Securities Exchange Act Release No. 92525 (July 30, 2021) (order approving SR-FINRA-2020-041).

[2]  See Letter from Michael Garawski, Associate General Counsel, FINRA, to Vanessa A. Countryman, Secretary, Commission, dated July 20, 2021, at 3.

[3]  See id. at 2-3.