Compliance Briefing — FINRA Regulatory Notice 20-08 on pandemic business continuity
FINRA issued Regulatory Notice 20-08 outlining expectations for member firms’ pandemic business continuity plans, supervisory controls, and remote work supervision during COVID-19. Broker-dealers must document how they maintain critical operations, supervise displaced personnel, and satisfy regulatory obligations while invoking BCPs.
Executive briefing: FINRA reminded broker-dealers to activate and document business continuity plans for COVID-19 disruptions. The notice addresses remote supervision, branch inspection postponements, and communications surveillance when staff work from alternative locations.
Why it matters
- Supervisory obligations: Firms remain responsible for supervising associated persons even when employees work remotely.
- Regulatory relief conditions: FINRA allows temporary relief for branch inspections and Form U4 amendments but expects firms to document their reliance.
- Customer protection: Continuity plans must safeguard customer access, fund transfers, and records during pandemic operations.
Operator actions
- Document BCP activation: Record when BCPs are invoked, affected offices, and interim supervisory arrangements.
- Remote supervision controls: Ensure trade surveillance, electronic communications review, and exception reporting remain active for displaced staff.
- Deferred inspections: Track branches relying on inspection relief and schedule follow-up examinations once on-site visits resume.
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