The Securities Litigation Expert Blog

Finra Requesting Comments on the 5 Percent Markup Rule

Posted by Jack Duval

Feb 5, 2013 4:51:15 AM

Finra has issued NTM 13-07 requesting comments on changes to rules regarding fees, commissions, and markups.  (13-07)

Here's the Executive Summary:

As part of the process to develop a new, consolidated rulebook (the Consolidated FINRA Rulebook),1 FINRA is requesting comment on proposed FINRA rules governing markups, markdowns, commissions and fees. FINRA initially sought comment on the proposed rules in Regulatory Notice 11-08.  In response to the comments received, FINRA is proposing several changes to the proposed rules. These changes include, among other things, amendments to: (1) retain the 5% markup policy in NASD IM-2440-1 (Mark-Up Policy); (2) revise certain of the relevant factors used to determine the reasonableness of markups and commissions; (3) eliminate the requirement to provide commission schedules for equity securities transactions to retail customers; and (4) extend the proposed markup rules to transactions in certain government securities. This Notice requests comment on the revised proposal.

The text of the proposed rules can be found at

Of course, the big issue is the 5 percent markup policy, which was supposed to be clarified years ago.  Many comments have been received on this issue, most requesting the limit to stay or be lowered.  (InvestmentNews)

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Topics: FINRA, investments, markups, fixed income, Compliance, NTM 13-07, regulation., InvestmentNews

Finra to Facilitate RIA Arbitrations

Posted by Jack Duval

Nov 1, 2012 4:16:37 AM

Bruce Kelly, of InvestmentNews, reports that Finra will soon open its dispute resolution arbitration platform to registered investment advisors.  (IN)  This is good news for RIA investors because those arbitrations have typically been heard in AAA or JAMS forums, which are much more expensive.  RIA firms may also welcome the lower costs.

Finra Dispute Resolution President Linda Feinberg announced that a few RIA cases were already in the system and a formal rollout will be coming soon.  Feinberg also said,

"The move is in no way related to Finra's effort to become the self-regulatory organization overseeing investment advisers."

Readers of this blog will note that we have covered the battle for investment advisor regulation being waged between Finra and the SEC here.  I will leave readers to their own opinions about how this move relates to that dispute.


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Topics: FINRA, RIA, Bruce Kelly, Investment Advisors, Investment Advisor, litigation, arbitration, AAA, Linda Feinberg, SEC, JAMS, Compliance, regulation., InvestmentNews

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