Proposed Rule Change to Adopt FINRA Rule 3290

Summary

SIFMA provided comments to the U.S. Securities and Exchange Commission (SEC), related to FINRA’s proposed rule change to adopt FINRA Rule 3290 (Outside Activities Requirements) to replace existing FINRA Rules 3270 (Outside Business Activities of Registered Persons) and 3280 (Private Securities Transactions of an Associated Person).

Excerpt

This response is intended to supplement SIFMA’s February 2026 letter addressing this proposal.4 We write to reiterate our support for FINRA’s proposed rule change, including the modifications in Amendment No. 1.

FINRA’s proposal reflects a meaningful effort to enhance regulatory efficiency without compromising investor protection. As discussed below, we appreciate the improvements FINRA has made, particularly the elimination of non-investment related activities from the outside activities requirements, as well as the revised requirements for unaffiliated investment adviser activities. We also urge FINRA to coordinate with the SEC and the states to harmonize the requirements of the Form U4 with Rule 3290 to ensure the effectiveness of the proposed rule.

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I. FINRA Should Consolidate the Existing Rules and Eliminate Non-Investment Related Activities from Outside Activities Requirements

SIFMA has long supported FINRA’s efforts to modernize and streamline its outside activities rules, and we appreciate FINRA’s proposal of a consolidated rule that eliminates the reporting requirements for non-investment related activities. The current rules require member firms to report and assess a large number of low-risk items that create white noise, diverting firm time and money from high-risk activities more likely to cause customer confusion or harm. FINRA’s risk-based proposal would eliminate the disclosure of such activities, allowing firms to focus on activities that pose the greatest risk to investors and members.

Like FINRA, we disagree with commenters who seek to maintain the status quo and require reporting for all outside activities, including those that are non-investment related. The existing framework imposes significant compliance burdens on firms without providing commensurate investor protection benefits. Notably, firms are required to expend substantial resources to monitor and maintain controls over low-risk activities—even those with no tie to the securities industry—which could include anything from charitable organization work to teaching to bartending. Firms should be able to focus their compliance resources on those activities with a potentially higher risk of investor harm.