SIFMA sent comments to the Department of Labor’s (the “Department”) notice of proposed rulemaking to revise its interpretation of independent…
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Re: FINRA Notice 19-36
To Whom It May Concern:
Thank you for the opportunity to provide feedback on Proposed New Rule 3241. The proposed rule would limit a registered person from being named a customer’s beneficiary or holding a position of trust for a customer. SIFMA appreciates the importance of this proposal in promoting trust and confidence in the securities industry and support FINRA’s efforts to protect customers through the implementation of this proposed rule.,
It is important to ensure the investing public understands the purpose of the rule and the potential conflict of interest. We would recommend FINRA make available resources, similar to those designed around FINRA Rules 2165 and 4512, that member firms may share with their customers explaining the rule and reasons for additional scrutiny to promote investor confidence. Our comments below focus on areas where additional clarification could be helpful.
I. SIFMA supports the proposal to require written notice and approval when certain registered individuals are named as a beneficiary or to positions of trust subject to exceptions
We agree that a registered individual being named as his or her customer’s beneficiary, trustee, power of attorney or holding other positions of trust could present potential conflicts of interest and should therefore be disclosed to the firm for review subject to certain exceptions. We agree with this approach rather than having a strict prohibition of such arrangements.