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[Release No. 34-106381; File No. SR-FINRA-2026-001]

Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Order

Approving a Proposed Rule Change, as Modified by Partial Amendment No. 1, to Adopt

FINRA Rule 3290 (Outside Activities Requirements)

September 15, 2026.

Introduction

On January 22, 2026, the Financial Industry Regulatory Authority, Inc. (“FINRA”) filed

with the Securities and Exchange Commission (“SEC” or “Commission”), pursuant to Section

19(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act”)1 and Rule 19b-4 thereunder,2

a 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).

The proposed rule change was published for comment in the Federal Register on

February 3, 2026.3 The public comment period closed on February 24, 2026. The Commission

received comment letters in response to the Notice.4 On March 13, 2026, FINRA consented to

an extension of the time period in which the Commission must approve the proposed rule

change, disapprove the proposed rule change, or institute proceedings to determine whether to

15 U.S.C. 78s(b)(1).

17 CFR 240.19b-4.

See Exchange Act Release No. 104746 (Jan. 29, 2026), 91 FR 5003 (Feb. 3, 2026) (File No. SR-FINRA2026-001) (“Notice”).

The comment letters are available at https://www.sec.gov/rules-regulations/public-comments/sr-finra-2026001.

approve or disapprove the proposed rule change to May 4, 2026.5 On May 1, 2026, FINRA

responded to the comment letters received in response to the Notice and filed a partial

amendment to modify the proposed rule change (“Amendment No. 1”).6 On May 1, 2026, the

Commission published a notice of the filing of Amendment No. 1 and an order instituting

proceedings (“OIP”) to determine whether to approve or disapprove the proposed rule change, as

modified by Amendment No. 1 (hereinafter referred to as the “proposed rule change” unless

otherwise specified).7 The public comment period closed on May 27, 2026. The Commission

received additional comment letters in response to the notice of the filing of the amendment and

OIP.8 On June 11, 2026, FINRA responded to the comment letters received in response to the

OIP.9 On July 24, 2026, FINRA consented to extend until October 1, 2026, the time period in

which the Commission must approve or disapprove the proposed rule change.10 This order

approves the proposed rule change, as modified by Amendment No. 1.

See letter from Alicia Goldin, Vice President and Associate General Counsel, Office of General Counsel,

FINRA (dated Mar. 13, 2026), https://www.finra.org/sites/default/files/2026-03/SR-FINRA-2026-001Extension1.pdf.

See letter from Matthew E. Vitek, Associate General Counsel, Office of General Counsel, FINRA (dated

May 1, 2026) (“FINRA I”), https://www.sec.gov/comments/SR-FINRA-2026-001/srfinra2026001-7658072350615.pdf; see also Amendment No. 1.

See Exchange Act Release No. 105355 (May 1, 2026), 91 FR 24613 (May 6, 2026) (File No. SR-FINRA2026-001).

See supra note 4.

See letter from Matthew E. Vitek, Associate General Counsel, Office of General Counsel, FINRA (dated

June 11, 2026) (“FINRA II”), https://www.sec.gov/comments/SR-FINRA-2026-001/srfinra2026001814261-2480673.pdf.

See letter from Alicia Goldin, Vice President and Associate General Counsel, Office of General Counsel,

FINRA (dated July 24, 2026), https://www.finra.org/sites/default/files/2026-07/FINRA-2026-001Extension-2.pdf.

II.

Description of the Proposed Rule Change

Background

FINRA Rule 3270 (Outside Business Activities of Registered Persons)

Subject to several exemptions, FINRA Rule 3270 prohibits a registered person from

being an employee, independent contractor, sole proprietor, officer, director or partner of another

person, or being compensated, or having the reasonable expectation of compensation, by any

other person as a result of any business activity outside the scope of the relationship with his or

her member firm (outside business activities or “OBA”), unless he or she has provided prior

written notice to the member, in such form as specified by the member.11

Upon receipt of a written notice, FINRA Rule 3270.01 requires the member to consider

whether the proposed activity will: (1) interfere with or otherwise compromise the registered

person’s responsibilities to the member and/or the member’s customers; or (2) be viewed by

customers or the public as part of the member’s business based upon, among other factors, the

nature of the proposed activity and the manner in which it will be offered. Based on the

member’s review of such factors, the member must evaluate whether to condition, limit, or

prohibit a registered person’s outside activity.12 FINRA Rule 3270.01 also requires a member to

evaluate the registered person’s proposed activity to determine whether the activity is properly

characterized as an OBA or a private securities transaction (“PST”) subject to the requirements

of FINRA Rule 3280. Additionally, FINRA Rule 3270.01 requires a member to keep a record of

its compliance with these obligations with respect to each written notice received and must

FINRA Rule 3270 exempts from its operative requirements passive investments and private securities

transactions subject to the requirements of FINRA Rule 3280.

See FINRA Rule 3270.01.

preserve this record in accordance with the time and accessibility requirements of Exchange Act

Rule 17a-4(e)(1).

FINRA Rule 3280 (Private Securities Transactions of an Associated

Person)

FINRA Rule 3280(a) prohibits an associated person of a member from participating in

any manner in a PST13 except in accordance with the following requirements:

•

FINRA Rule 3280(b) requires an associated person, prior to participating in any private

securities transaction, to provide written notice to the member with which he or she is

associated, describing in detail the proposed transaction and the person’s proposed role

therein and stating whether he or she has received or may receive selling compensation in

connection with the transaction;14

•

FINRA Rule 3280(c)(1) requires a member that has received notice from one of its

associated persons regarding a proposed transaction for which the associated person has

received or may receive selling compensation to advise the associated person in writing

whether it approves or disapproves the person’s participation in the proposed transaction;

•

FINRA Rule 3280(c)(2) requires a member that approves its associated person’s

participation in a proposed transaction to record the transaction on its books and records

FINRA Rule 3280(e)(1) defines a PST as any securities transaction outside the regular course or scope of

an associated person’s employment with a member, excluding: (1) transactions subject to the notification

requirements of FINRA Rule 3210 (Accounts at Other Broker-Dealers and Financial Institutions); (2)

transactions among immediate family members (as defined in FINRA Rule 5130 (Restrictions on the

Purchase and Sale of Initial Equity Public Offerings)) for which no associated person receives any selling

compensation; and (3) personal transactions in investment company and variable annuity securities.

FINRA Rule 3280(e)(2) defines “selling compensation” as any compensation paid directly or indirectly

from whatever source in connection with, or as a result of, the purchase or sale of a security.

In the case of a series of related transactions in which no selling compensation has been or will be received,

an associated person may provide a single written notice. FINRA Rule 3280(b).

supervise the associated person’s participation in the transaction as if the transaction were

executed on behalf of the member;

•

FINRA Rule 3280(c)(3) prohibits an associated person from participating in a transaction

if the member disapproves its associated person’s participation in the proposed

transaction; and

•

FINRA Rule 3280(d) requires a member that has received notice from one of its

associated persons regarding a proposed transaction or series of related transactions for

which the associated person has not and will not receive any selling compensation to

provide the associated person prompt written acknowledgment of his or her notice.15

The Proposed Rule Change

The proposed rule change would replace current FINRA Rules 3270 and 3280 with new

FINRA Rule 3290. Proposed FINRA Rule 3290 would retain, or be substantially similar to,

many of the existing requirements of the current rules under two distinct categories of activities:

(1) outside investment-related activities of registered persons and (2) outside securities

transactions of associated persons.16 Similar to the obligations imposed under current Rules

3270 and 3280, associated persons generally would be required to report outside securities

transactions, while only registered persons would be required to report outside activities.

As discussed in more detail below, the proposed rule would narrow the scope of

reportable activities of registered persons from outside business activities to outside investmentrelated activities (defined as “outside activities” of registered persons). Under proposed FINRA

Rule 3290, “investment-related activity” would cover a range of activities involving financial

The member may also require the associated person to adhere to specified conditions in connection with his

or her participation in the transaction. See FINRA Rule 3280(d).

The term “associated persons” includes “registered persons.” See Notice at 5005.

assets beyond securities but would be subject to certain exclusions and exceptions. The

proposed rule change would also: (1) recharacterize certain associated person activities (such as

those involving an unaffiliated investment adviser) that are currently treated as PSTs under

FINRA Rule 3280 as outside activities (rather than as outside securities transactions); (2) codify

the treatment of certain activities as outside activities; and (3) exclude from the rule’s coverage

activity conducted by associated persons (including registered persons) on behalf of an affiliate

of a member, certain personal real estate activities, and personal investments in non-securities.

While the proposed rule change would change the scope of activities covered by, or the

characterization of certain activities under (i.e., as an outside activity instead of as an outside

securities transaction) the proposed rule, many of the obligations imposed on outside activities or

outside securities transactions would either be retained or would be substantially similar to the

existing requirements for an OBA or a PST, including: (1) requiring that a registered person who

intends to participate in certain outside activities and an associated person who intends to

participate in outside securities transactions (as defined below) provide prior written notice to the

member; (2) requiring members receiving a notice to assess, among other things, whether to

permit, prohibit, or limit the person’s participation in the identified proposed activity; (3)

requiring members’ prior written approval or disapproval of certain activities; and (4) requiring

member supervision and recordkeeping of certain activities.17

FINRA stated that, consistent with existing FINRA Rules 3270 and 3280, both the notice

requirements and member obligations upon receiving the notice would differ depending on the

type of activity (outside activity, outside securities transaction not for selling compensation, or

Notice at 5004. The proposed rule change would also retain the definition of “selling compensation” set

forth in FINRA Rule 3280(e)(2).

outside securities transaction for selling compensation).18 The member’s obligations after

conducting an assessment would also depend on the type of activity, with the greatest member

obligations applying to outside securities transactions for selling compensation.19

Importantly, the proposed rule change would not limit a member’s ability to expand the

scope of its assessment for reportable activities beyond the minimum requirements established in

the proposed rule change or to exercise discretion to apply stricter criteria and impose conditions

or prohibitions based on the member’s own assessment of the risk presented by the identified

activity.20 Additionally, nothing in the proposed rule change would alter the well-settled

principle that members must investigate “red flags” indicating problematic activities.21

FINRA stated that by merging the two existing rules, the proposed rule change would

enhance members’ regulatory efficiency without compromising protections for investors and

members relating to outside activities.22 FINRA stated that reducing or eliminating the

regulatory burden on members for activities that FINRA believes are lower risk would enable

members to redirect supervisory and compliance resources away from activities that pose fewer

investor protection concerns and toward higher-risk investment-related activities.23 For example,

FINRA stated that the proposed rule would focus on those outside activities that are

appropriately within the members’ purview that are a potential risk to members and the public.24

At the same time, FINRA stated that the proposed rule would provide exclusions for certain

Notice at 5005.

Id.

Id. at 5007.

See id. at 5005, note 8.

Id. at 5004.

Id. at 5007.

See id. at 5004.

activities that FINRA has assessed pose lower risk to its members or the public, including

activity conducted at an affiliate or activities such as bartending or refereeing sports games.25 As

such, FINRA stated that the proposed rule change would serve the public interest by maintaining

the core investor protections of the existing rules and addressing the treatment of business

activities and securities transactions that are outside the regular scope of individuals’ association

with a member, while narrowing the scope of reportable activities to those that present higher

risk, particularly the risk that customers or the public would view the activities as part of the

member’s business.26 In this way, FINRA stated, the rule would promote more effective riskbased oversight and, as a result, enhance investor protection.27

Each of the proposed rule changes is discussed below in turn.

Outside Activities

Registered Person’s Obligations

Proposed FINRA Rule 3290(a) (Obligations of a Registered Person for Outside Activity)

would require a registered person who intends to participate in an “outside activity” (that is, an

investment-related activity28 outside the scope of such person’s relationship with the member

that is not in connection with a securities transaction) to provide prior written notice to the

member regarding such outside activity. In addition, proposed FINRA Rule 3290(a) would

require a registered person to update any prior written notice to the member if there is a material

Id.

Id. at 5007.

Id.

Proposed FINRA Rule 3290(f)(3) would define the term “investment-related activity.” See infra Section

II.B.3. (Proposed Definition of Investment-Related Activity). Proposed FINRA Rule 3290 also contains

exclusions and exceptions for certain activities that would otherwise fall within the definition of

“investment-related activity.” See infra Section II.B.5 (Exclusions from Proposed FINRA Rule 3290);

Section II.B.6. (Associated Person Activities Subject to a Contractual Arrangement).

change to the outside activity. For any notice provided pursuant to the proposed rule, the

registered person would be required to describe in detail the proposed outside activity and the

person’s proposed role therein.29

Obligations of a Member for a Registered Person’s Outside

Activity

Proposed Rule 3290(c) (Obligations of a Member for a Registered Person’s Outside

Activity) would require a member receiving written notice of a registered person’s outside

activity to assess, at a minimum, whether the outside activity: (1) is an outside securities

transaction;30 (2) involves a customer of the registered person; (3) will interfere with or

otherwise compromise the registered person’s responsibilities to the member or the member’s

customers; and (4) will be viewed by the member’s customers or the public as part of the

member’s business based upon, among other factors, the nature of the proposed activity and the

manner in which it will be offered.31 FINRA stated that the proposed rule change would add

factor (2) (regarding whether the outside activity involves a customer of a registered person) to

factors (1), (3), and (4) above, which are consistent with the existing requirements for an OBA

under FINRA Rule 3270.32

Based on the member’s review of such factors, the member would be required to evaluate

whether to condition, limit, or prohibit a registered person’s outside activity.33

Proposed FINRA Rule 3290(a).

FINRA stated that a person may, mistakenly or intentionally, mischaracterize an activity. For this reason,

among others, a member must analyze whether the activity is properly characterized to determine its

obligations, which vary depending on the activity. See Notice at 5005. If the member determines that the

activity is an outside securities transaction, the member would be required to comply with the obligations

listed in proposed FINRA Rule 3290(d), as discussed below.

Proposed FINRA Rule 3290(c)(1).

Notice at 5005.

See proposed FINRA Rule 3290(c)(2).

If a member imposes conditions or limitations on an associated person’s participation in

such an outside activity, proposed FINRA Rule 3290.06 would require the member to reasonably

supervise the person’s compliance with such conditions or limitations.34 FINRA stated that this

obligation is already implicit in existing FINRA Rule 3270, but would be made explicit in

proposed FINRA Rule 3290.35

Outside Securities Transactions

Associated Person’s Obligations

Proposed FINRA Rule 3290(b) (Obligations of an Associated Person for Outside

Securities Transactions) would require an associated person who intends to participate in an

“outside securities transaction” (that is, an investment-related activity36 outside the scope of the

associated person’s relationship with the member that is in connection with a securities

transaction) to provide prior written notice to the member, describing in detail the proposed

transaction, the person’s proposed role therein, and whether the person will receive selling

compensation.37 In addition, FINRA Rule 3290(b)(2) would require an associated person to

update any prior written notice if there is a material change to the outside securities transaction

See Amendment No. 1.

See FINRA I at 16; see also Amendment No. 1.

See infra Section II.B.3. (Proposed Definition of Investment-Related Activity) for discussion of

“investment-related activity.”

Proposed FINRA Rules 3290(b)(1) and (3). A separate notice would be required for each outside securities

transaction unless an exception applies that allows the use of a single notice. See Notice at 5005. Proposed

FINRA Rule 3290(b)(1)(A) would permit an associated person who intends to participate in an outside

securities transaction that is in connection with a series of related securities transactions not for selling

compensation to provide a single prior written notice to the member. Similarly, proposed FINRA Rule

3290(b)(1)(B) would permit an associated person acting as portfolio manager or investment committee

member for registered investment companies, unregistered investment companies, business development

companies, real estate investment trusts, and entities that are recognized as tax exempt, and who is not

selling an entity’s shares for selling compensation, to provide a single prior written notice to the member.

See proposed FINRA Rule 3290.02; see also infra Section II.B.4.a. (Associated Persons Acting as Portfolio

Managers and Investment Committee Members).

described in such notice. Where the associated person intends to participate in an outside

securities transaction for selling compensation, the associated person also would need to obtain

prior written approval from the member (including approval for any material change to any

information provided pursuant to proposed FINRA Rule 3290(b)(1)).38

Obligations of a Member for an Associated Person’s Outside

Securities Transactions

Proposed Rule 3290(d)(1) would require a member receiving written notice of an

associated person’s outside securities transaction to assess, at a minimum, whether the outside

securities transaction: (1) is a securities transaction for selling compensation;39 (2) involves a

customer of the associated person;40 (3) will interfere with or otherwise compromise the

associated person’s responsibilities to the member or the member’s customers;41 and (4) will be

viewed by the member’s customers or the public as part of the member’s business based upon,

among other factors, the nature of the proposed activity and the manner in which it will be

offered.42 FINRA stated that while existing FINRA Rule 3280 does not require consideration of

the four factors identified in proposed FINRA Rule 3290(d) when assessing a PST, FINRA

understands that the proposed rule change is consistent with members’ current practices.43

See proposed FINRA Rules 3290(b)(1), (2). FINRA Rule 3290(f)(5) would define “selling compensation”

as any compensation paid directly or indirectly from whatever source in connection with or as a result of

the purchase, sale or exchange of a security. The proposed definition of “selling compensation” is

consistent with the definition in FINRA Rule 3280(e)(2).

Proposed FINRA Rule 3290(d)(1)(A).

Proposed FINRA Rule 3290(d)(1)(B).

Proposed FINRA Rule 3290(d)(1)(C).

Proposed FINRA Rule 3290(d)(1)(D). Pursuant to proposed FINRA Rule 3290(d)(1), a member would not

be required to assess an outside securities transaction for selling compensation when disapproving it under

proposed Rule 3290(d)(3)(C).

See Notice at 5005.

A member’s obligations for an associated person’s outside securities transactions would

depend, in part, on whether the outside securities transaction is for selling compensation. If the

outside securities transaction is not for selling compensation, proposed FINRA Rule 3290(d)(2)

would require the member to: (1) provide the associated person prompt written

acknowledgement of such notice;44 and (2) at the member’s discretion, require the associated

person to adhere to specified conditions45 in connection with the associated person’s participation

in the transaction. If, instead, the outside securities transaction is for selling compensation,

proposed FINRA Rule 3290(d)(3) would require the member to notify the associated person in

writing of the member’s decision to: (1) approve the proposed transaction after making a

reasonable determination based on the criteria enumerated in proposed FINRA Rule 3290(d)(1);

(2) approve the proposed transaction subject to specific conditions or limitations after a

reasonable determination based on the criteria enumerated in proposed FINRA Rule 3290(d)(1);

or (3) disapprove the proposed transaction.46

If a member imposes conditions or limitations on an associated person’s participation in

such an outside securities transaction, proposed FINRA Rule 3290.06 would require the member

to reasonably supervise the person’s compliance with such conditions or limitations.47 FINRA

stated that this obligation is already implicit in existing FINRA Rule 3280, but would be made

explicit in proposed FINRA Rule 3290.48

A single written acknowledgement may be used in the case of a series of related outside securities

transactions not for selling compensation. See proposed FINRA Rule 3290(d)(2).

See Amendment No.1 (FINRA stated that adding a reference to “limitations” in proposed FINRA Rule

3290(d)(2) would improve consistency with proposed FINRA Rules 3290(c)(2) and (d)(3)).

Proposed FINRA Rule 3290(d)(3)(A)-(C).

See Amendment No. 1.

See FINRA I at 16; see also Amendment No. 1.

Further, proposed FINRA Rule 3290(d)(4) would require a member to record each

approved outside securities transaction for selling compensation on the books and records of the

member and supervise the person’s participation in the transaction as if executed on behalf of the

member. However, if a member approves an associated person’s participation in an outside

securities transaction involving selling compensation and that person is associated with more

than one member, proposed FINRA Rule 3290.01 would permit members to develop a written

allocation arrangement whereby at least one member agrees to be responsible for compliance

with respect to all applicable securities laws and regulations and FINRA rules regarding the

proposed activity, including those requiring member supervision and recordkeeping.49 FINRA

stated that the proposed rule change would codify existing guidance in NASD Notice to

Members 96-33, allowing for potential efficiency gains for members that may have been

unaware of such previous guidance.50

Proposed Definition of Investment-Related Activity

The obligations of proposed FINRA Rules 3290(a)-(d) are triggered by the participation

of a member’s associated person in an investment-related activity that is outside the scope of the

associated person’s or registered person’s relationship with the member. Proposed FINRA Rule

3290(f)(3) would define the term “investment-related activity” as pertaining to financial assets

including, but not limited to, securities, crypto assets, commodities, derivatives (such as futures

and swaps), currency, banking, real estate or insurance. The term includes, but is not limited to:

(1) acting as or being associated with a broker-dealer, issuer, insurance agent or company,

investment company, investment adviser, futures commission merchant, commodity trading

Proposed FINRA Rule 3290.01.

See Notice at 5006, 5008.

advisor, commodity pool operator, municipal advisor, futures sponsor, money services business,

bank, savings association, or credit union; and (2) an associated person’s participation in any

manner in a personal investment involving a securities transaction (sometimes referred to as

“buying away”), other than transactions indicated in proposed FINRA Rule 3290(g)(3)(A).51

FINRA stated that by focusing the application of proposed Rule 3290 on activities involving

financial assets, the proposed rule change would eliminate the burdens associated with the

reporting and assessment of activities that FINRA views as having lower risk (such as refereeing

sports games and bartending), allowing members to dedicate resources to activities presenting

higher risk to investors, particularly the risk that investors or the public would view the activities

as part of the member’s business and thus under its supervision.52

Specific Activities Treated as Outside Activities for Purposes of

Proposed FINRA Rule 3290

Associated Persons Acting as Portfolio Managers and

Investment Committee Members

Proposed FINRA Rule 3290.02 states that an associated person would not be considered

to be participating in an outside securities transaction to the extent the associated person’s

activities are limited to acting as portfolio manager or investment committee member for

registered investment companies (e.g., mutual funds, exchange traded funds, unit investment

Proposed FINRA Rule 3290(g)(3)(A) would exclude from the definition of “investment-related activity” an

associated person’s personal investments involving securities transactions subject to or delineated in

FINRA Rule 3210. FINRA Rule 3210 applies to securities transactions effected by the associated person or

their related persons, as delineated in FINRA Rule 3210.02, at any financial institution other than the

member that employs the associated person. FINRA Rule 3210.03 excludes some transactions and

accounts from that rule: transactions in unit investment trusts, municipal fund securities as defined under

MSRB Rule D-12, qualified tuition programs pursuant to Section 529 of the Internal Revenue Code,

variable contracts or redeemable securities of companies registered under the Investment Company Act of

1940, or accounts that are limited to transactions in such securities, or monthly-investment-plan-type

accounts, or accounts pursuant to Section 530A of the Internal Revenue Code. FINRA Rule 3210.03

(Transactions and Accounts not Subject to this Rule).

See Notice at 5004.

trusts, or registered closed-end funds), unregistered investment companies, business development

companies, real estate investment trusts, and entities that are recognized as tax exempt. Such

activity would be treated as an outside activity and not an outside securities transaction.53

However, proposed FINRA Rule 3290.02 also states that the proposed exception would

not include an associated person’s activities related to purchasing or selling such entities’ shares.

Those activities would instead be considered an outside securities transaction subject to the

applicable notice and assessment requirements in proposed FINRA Rule 3290(b) and (d) unless

otherwise excluded under proposed FINRA Rule 3290(g) (discussed infra).

FINRA stated that this proposed rule change would codify FINRA staff’s position that:

(1) an associated person would need to provide prior written notice for activities related to

purchasing or selling such entities’ shares, and (2) the member would not be required to

supervise and maintain records for the activity, unless the associated person is selling such

entities’ shares for selling compensation and such activity is not otherwise excluded under the

proposed rule.54

Associated Person Activity at an Unaffiliated Registered

Investment Adviser (“RIA”)

Proposed FINRA Rule 3290.03 states that an associated person’s activity at an

investment adviser registered either with the Commission under Section 203 of the Investment

Advisers Act (“Advisers Act”) or with a state securities commission (or any agency or office

As an “outside activity,” such activity would be subject to the notice and assessment requirements of

proposed FINRA Rules 3290(a) and (c).

See Notice at 5006.

performing like functions) would be treated as an outside activity of a registered person (and not

an outside securities transaction).55

FINRA stated that the proposed rule change would eliminate members’ supervision and

recordkeeping obligations for investment advisory activities performed by associated persons at

unaffiliated investment advisers, which were set forth in FINRA guidance issued in the 1990s.56

FINRA stated that this prior guidance has caused significant confusion and practical challenges,

including privacy challenges to members seeking account information for clients of an

unaffiliated investment adviser through which the member’s associated person may be acting in

an investment advisory capacity.57 FINRA stated that without access to information necessary to

meaningfully supervise outside unaffiliated investment advisory activities, members would

unreasonably bear regulatory responsibility and potential liability without adequate means to

fulfill their regulatory obligations.58 In addition, FINRA stated that such investment advisers are

generally directly regulated by either the Commission or the states, and subject to fiduciary

obligation to their clients.59

Associated Person Outside Securities Activity Subject to the

Gramm-Leach-Bliley Act (GLBA) or Exchange Act Regulation

Proposed FINRA Rule 3290.05 states that an associated person’s securities activity that

qualifies under the GLBA or SEC Regulation R’s exception to broker or dealer60 registration

Such activity would be subject to the requirements of proposed FINRA Rules 3290(a) and (c). See supra

note 53.

See, e.g., Notice at 5006; NASD Notice to Members 94-44 (May 1994) and 96-33 (May 1996).

See Notice at 5006.

Id. at 5011.

Id. at 5006.

The GLBA amended the Exchange Act to except specified securities activities conducted by banks from

broker or dealer registration. See Exchange Act Section 3(a)(4)(B). See also Definitions of Terms and

requirements and that is not otherwise covered by proposed FINRA Rule 3290.0461 would be

treated as an outside activity (and not an outside securities transaction).62 FINRA stated that the

proposed rule change would codify FINRA staff’s position with respect to this outside activity.63

Specifically, it would clarify that an associated person’s securities activity under proposed Rule

3290.05 would have a prior written notice and assessment requirement but would not be subject

to member supervision and recordkeeping by the member.64

Exclusions from Proposed FINRA Rule 3290

Associated Person Activity on Behalf of a Member or an

Affiliate

Proposed FINRA Rule 3290(g) would exclude from proposed FINRA Rule 3290 an

associated person’s activity on behalf of a member or its affiliate.65 Proposed FINRA Rule

3290(f)(1) would define “affiliate” as any entity that controls, is controlled by, or is under

common control with a member. According to FINRA, this exclusion would include activity

such as investment advisory activity at a member that is registered as both a broker-dealer and an

investment adviser, as well as investment advisory, insurance, or banking activity conducted on

behalf of an affiliate.66 FINRA stated that this exclusion for activity conducted on behalf of a

Exemptions Relating to the “Broker” Exceptions for Banks, Exchange Act Release No. 56501, 72 Fed.

Reg. 56514 (Oct. 3, 2007); Definition of Terms in and Specific Exemptions for Banks, Savings

Associations, and Saving Banks Under Sections 3(a)(4) and 3(a)(5) of the Securities Exchange Act of 1934,

Exchange Act Release No. 47364 (Feb. 14, 2003), 68 Fed. Reg. 8686 (Feb. 24, 2003).

See infra Section II.B.6 (Associated Person Activities Subject to a Contractual Arrangement).

Such activity would be subject to the requirements of proposed FINRA Rules 3290(a) and (c). See supra

note 53.

See Notice at 5006.

Id.

Proposed FINRA Rule 3290(g)(1).

See Notice at 5005.

member or its affiliate recognizes members’ and their control persons’ ability to implement

meaningful controls across business lines.67

Securities Transactions Among Immediate Family Members of

an Associated Person

Proposed FINRA Rule 3290(g) would exclude from proposed FINRA Rule 3290 an

associated person’s securities transactions among immediate family for which the associated

person receives no selling compensation.68 Proposed FINRA Rule 3290(f)(2) would define

“immediate family” to have the same meaning as in paragraph (c) of Rule 3240 (Prohibition on

Borrowing from or Lending to Customers).69 FINRA stated that this exclusion recognizes the

lower risks to investors and members associated with this activity and the inefficiency of

members’ having to expend significant resources reviewing it.70

Certain Personal Investments of an Associated Person

Proposed FINRA Rule 3290(g)(3) would exclude from proposed FINRA Rule 3290 the

following personal investments of an associated person: (1) securities transactions subject to or

delineated in FINRA Rule 3210 (Accounts at Other Broker-Dealers and Financial Institutions);71

(2) personal investments in non-securities; and (3) the purchase, sale, rental or lease of a main

home and up to two secondary homes72 that are: (a) solely owned by the associated person or the

Id. at 5005-6.

Proposed FINRA Rule 3290(g)(2).

FINRA Rule 3240 defines the term “immediate family” as “parents, grandparents, mother-in-law or fatherin-law, spouse or domestic partner, brother or sister, brother-in-law or sister-in-law, son-in law or daughterin-law, children, grandchildren, cousin, aunt or uncle, or niece or nephew, and any other person who resides

in the same household as the registered person and the registered person financially supports, directly or

indirectly, to a material extent. The term includes step and adoptive relationships.”

Notice at 5006.

See supra note 51.

Proposed FINRA Rule 3290(f)(4) would define “secondary home” as a property that is used for residential

purposes by the associated person for at least part of the year.

associated person and immediate family;73 (b) owned by the associated person as a sole

proprietorship; (c) owned by a corporation, LLC, partnership, limited partnership, or other entity

that is solely owned by the associated person or the associated person and immediate family;74 or

(d) owned by a trust with the associated person or the associated person and immediate family as

the sole beneficiaries.75 FINRA stated that these exclusions recognize the lower risks to

investors and members associated with these activities and the inefficiency of members’ having

to expend significant resources reviewing them.76

Associated Person Activities Subject to a Contractual Arrangement

Proposed FINRA Rule 3290.04 states that an associated person’s activity that is pursuant

to a contract between a member and another entity (e.g., banking or insurance networking

arrangement) would not be subject to proposed FINRA Rule 3290 if such activity is conducted

on behalf of the member as it is within the scope of the associated person’s relationship with the

member. FINRA stated that the proposed rule change is consistent with current requirements

and, as is currently required, such activity already would be subject to broker-dealer supervision

under FINRA Rule 3110.77

See supra note 69 and accompanying text.

Proposed FINRA Rule 3290(g)(3)(C)(3).

Proposed FINRA Rule 3290(g)(3)(C)(4).

Notice at 5006.

Id. at 5006 n.13 (and accompanying text).

Recordkeeping

Proposed FINRA Rule 3290(e) would require a member to keep a record of its

compliance with the obligations under proposed FINRA Rule 3290 and preserve this record in

accordance with the time and accessibility requirements of Exchange Act Rule 17a-4(e)(1).78

General Exemptive Authority

Proposed FINRA Rule 3290(h) would authorize FINRA staff, for good cause shown after

taking into consideration all relevant factors, to conditionally or unconditionally grant an

exemption pursuant to the FINRA Rule 9600 Series from any provision of proposed FINRA

Rule 3290 to the extent that such exemption is consistent with the purpose of the rule, the

protection of investors, and the public interest. FINRA stated that while the proposed rule

change is broadly applicable, having the flexibility to provide relief from a particular provision

of proposed Rule 3290 where specific factual circumstances justify an exemption would be

useful and appropriate.79 FINRA also proposed a conforming amendment to FINRA Rule 9610

to add proposed FINRA Rule 3290 to the list of FINRA rules for which members may seek

exemptive relief.80

III.

Discussion and Commission Findings

After careful review of the proposed rule change, comment letters received, and FINRA’s

responses to the comments, the Commission finds that the proposed rule change is consistent

with the requirements of the Exchange Act and the rules and regulations thereunder that are

Rule 17a-4(e)(1) states that members subject to Exchange Act Rule 17a-3 must maintain and preserve in an

easily accessible place all records required under Rule 17a-3(a)(12) until at least three years after the

associated person’s employment and any other connection with the member has terminated.

Notice at 5006.

Id. at 5006 n.15.

applicable to a national securities association.81 Specifically, the Commission finds that the

proposed rule change is consistent with Section 15A(b)(6) of the Exchange Act, which requires,

among other things, that FINRA rules be designed to prevent fraudulent and manipulative acts

and practices, to promote just and equitable principles of trade, and, in general, to protect

investors and the public interest.82

The proposed rule change is reasonably designed to focus member supervisory and

compliance resources on the types of outside activities—that is, investment-related activities—of

a member’s registered or associated persons that are appropriately within the member’s purview,

particularly where the activities are most likely to be viewed by investors or other members of

the public as part of the member’s business and thus under its supervision. The proposed rule

change reasonably imposes on members different obligations depending on the nature of the

identified activity and its associated risk to the member, investors, and the public. The member’s

obligation is greatest for those activities that present heightened potential risk to investors and to

the public, namely when the activity is an associated person’s outside securities transaction for

selling compensation.

Other categories of activity—an associated person’s outside securities transaction not for

selling compensation and a registered person’s outside activity that is outside the scope of their

employment with the member (including activity that is subject to another regulatory regime

such as activity at an unaffiliated registered investment adviser or a bank)—require the member

to assess or restrict the activity as the member determines is necessary but does not require the

member to explicitly approve or supervise that activity. For these categories of activity, the risk

In approving this rule change, the Commission has considered the rule’s impact on efficiency, competition,

and capital formation. See 15 U.S.C. 78c(f).

15 U.S.C. 78o-3(b)(6).

to investors or the public, including the risk that they will view the activity as part of the

member’s business and under its supervision, is lower, and reasonably calibrates a member’s

obligations in accordance with that risk. The proposed rule change also enables a member to

impose conditions or limitations, which could include subjecting the activity to the member’s

supervision, if the member deems it necessary to manage its own risk. Finally, the proposed rule

change eliminates reporting obligations for outside activities that are lower risk, either because

the activities are inherently unlikely to pose risks to investors or the public (e.g., refereeing

sports games), or the member is likely either to be already aware of the activity or to have ready

access to information about the activity (e.g., activities on behalf of an affiliate).

The overall process established by the proposed rule, under which the member’s

obligations vary based on the nature of the activity, will allow individual members to tailor their

oversight of outside activities based on the member’s business model, supervisory structure, and

the member’s risk assessment of the outside activity at issue.

Importantly, the proposed rule change would not limit a member’s ability to impose more

robust supervision of, or to condition, limit, or prohibit, as appropriate, outside activities at the

member’s discretion. For example, a member may expand the scope of its assessment or

implement additional appropriate safeguards, limitations, or prohibitions, beyond the minimum

requirements established here.83 In addition, although the affiliate exclusion in proposed FINRA

Rule 3290(g) permits members to exclude activity on behalf of a member or its affiliate,

members are free to impose a notice and assessment requirement for this activity if the member

has determined additional safeguards are appropriate for its business.84 Similarly, the proposed

See, e.g., Notice at 5011; FINRA I at 9; FINRA II at 4.

See FINRA I at 9.

rule change does not alter members’ overarching supervisory responsibilities under the federal

securities law and FINRA Rule 3110 to supervise its business and to investigate and act upon red

flags indicating potential misconduct. Accordingly, and as explained in more detail below, the

Commission finds that the proposed rule change is consistent with Section 15A(b)(6) of the

Exchange Act.85 The Commission addresses the proposed rule change’s specific provisions, and

any related comments, in turn.

Proposed FINRA Rule 3290(a)-(d)

As stated above, the proposed rule change would replace current FINRA Rules 3270 and

3280 with proposed FINRA Rule 3290. Proposed FINRA Rule 3290(a)-(d) would retain many

of the existing requirements of the current rules as part of two distinct categories of activities: (1)

outside activities of registered persons, and (2) outside securities transactions of associated

persons. Specifically, proposed FINRA Rule 3290(a) and (c) would address the obligations of

registered persons and members, respectively, with respect to outside activities of registered

persons; proposed FINRA Rule 3290(b) and (d) would address the obligations of associated

persons and members, respectively, with respect to outside securities transactions of associated

persons. The discussion below addresses the obligations triggered by these two categories.

Outside Activities of Registered Persons – Obligations of Registered

Persons (Proposed FINRA Rule 3290(a)) and Members (Proposed

FINRA Rule 3290(c))

As stated above, the proposed rule change would, among other things, require a

registered person who intends to participate in an outside activity that is not in connection with a

securities transaction to provide prior written notice to the member describing in detail the

15 U.S.C. 78o-3(b)(6).

proposed outside activity and the person’s proposed role therein.86 In the event of a material

change to the outside activity, a registered person would be required to provide an updated prior

written notice.87

The proposed rule change would require a member receiving a notice to assess, at a

minimum, whether the outside activity: (1) is an outside securities transaction; (2) involves a

customer of the registered person; (3) will interfere with or otherwise compromise the registered

person’s responsibilities to the member or the member’s customers; and (4) will be viewed by

the member’s customers or the public as part of the member’s business based upon, among other

factors, the nature of the proposed activity and the manner in which it will be offered.88 Based

on the member’s review of such factors, the member would be required to evaluate whether to

condition, limit, or prohibit a registered person’s outside activity.89 If a member imposes

conditions or limitations on a registered person’s outside activity, proposed FINRA Rule 3290.06

would require the member to reasonably supervise the person’s compliance with such conditions

or limitations.90

Outside Securities Transactions of Associated Persons – Obligations of

Associated Persons (Proposed FINRA Rule 3290(b)) and Members

(Proposed FINRA Rule 3290(d))

As stated above, the proposed rule change would require an associated person of a

member who intends to participate in an outside securities transaction to provide prior written

notice to the member, describing in detail the proposed transaction, the person’s proposed role

Proposed FINRA Rule 3290(a).

Id.

Proposed FINRA Rule 3290(c)(1).

Proposed FINRA Rule 3290(c)(2).

Proposed FINRA Rule 3290.06.

therein, and whether the person will receive selling compensation.91 The associated person must

provide prior written notice (and if the transaction is for selling compensation, receive prior

written approval) for each separate transaction, with two exceptions: (1) a series of related

securities transactions not for selling compensation; and (2) where the associated person is acting

as a portfolio manager or investment committee member for an entity as described in proposed

FINRA Rule 3290.02 and is not selling the entity’s shares for selling compensation.92 In those

two cases, the associated person may provide a single prior written notice.93 In the event of a

material change to the outside securities transaction, an associated person would be required to

update any prior written notice and, if the outside securities transaction is for selling

compensation, obtain prior written approval from the member for the material change.94

Upon receiving the notice, the proposed rule change would require a member to assess, at

a minimum, whether the securities transaction: (1) is a securities transaction for selling

compensation; (2) involves a customer of the associated person; (3) will interfere with or

otherwise compromise the associated person’s responsibilities to the member or the member’s

customers; and (4) will be viewed by the member’s customers or the public as part of the

member’s business based upon, among other factors, the nature of the proposed activity and the

manner in which it will be offered.95

If the outside securities transaction is not for selling compensation, the proposed rule

change would require the member to: (1) provide the associated person prompt written

Proposed FINRA Rule 3290(b)(1), (3).

Proposed FINRA Rule 3290(b)(1)(A)-(B).

Proposed FINRA Rule 3290(b)(2).

Proposed FINRA Rule 3290(d)(1).

acknowledgement of such notice, and (2) at the member’s discretion, require the associated

person to adhere to specified conditions in connection with the associated person’s participation

in the transaction.96

If the outside securities transaction is for selling compensation, proposed FINRA Rule

3290(d)(3) would require the member to notify the associated person in writing of the member’s

decision to: (1) approve the proposed transaction after making a reasonable determination based

on the criteria enumerated in proposed FINRA Rule 3290(d)(1); (2) approve the proposed

transaction subject to specific conditions or limitations after a reasonable determination based on

the criteria enumerated in proposed FINRA Rule 3290(d)(1); or (3) disapprove the proposed

transaction.97 In addition, proposed FINRA Rule 3290(d)(4) would require a member to record

each approved outside securities transaction for selling compensation on its books and records

and to supervise the person’s participation in the transaction as if executed on behalf of the

member.98 Further, if a member imposes conditions or limitations on an associated person’s

participation in an outside securities transaction (whether or not for selling compensation),

proposed FINRA Rule 3290.06 would require the member to reasonably supervise the person’s

compliance with such conditions or limitations.99

As stated above, proposed FINRA Rule 3290.01 would provide that if a member

approves an associated person’s participation in an outside securities transaction involving

selling compensation and that person is associated with more than one member, the members

may develop a written allocation arrangement whereby at least one member agrees to be

Proposed FINRA Rule 3290(d)(2).

Proposed FINRA Rule 3290(d)(3).

Proposed FINRA Rule 3290(d)(4)

Proposed FINRA Rule 3290.06.

responsible for compliance with respect to all applicable securities laws and regulations and

FINRA rules regarding the proposed activity, including those requiring member supervision and

recordkeeping.

Comments on Proposed FINRA Rule 3290(a)-(d) and FINRA’s

Response, including Amendment

Many commenters supported the proposed consolidation of FINRA Rules 3270 and 3280

into proposed FINRA Rule 3290(a)-(d),100 stating that consolidating the OBA and PST reporting

100

See, e.g., letters from Bernard V. Canepa, Managing Director & Associate General Counsel, Securities

Industry and Financial Markets Association (“SIFMA”), at 1 (dated Feb. 24, 2026),

https://www.sec.gov/comments/sr-finra-2026-001/srfinra2026001-715007-2237915.pdf (“SIFMA I”);

Alyssa Pompei, Vice President & Assistant General Counsel, SIFMA, at 1 (dated May 27, 2026),

https://www.sec.gov/comments/SR-FINRA-2026-001/srfinra2026001-791999-2397527.pdf (“SIFMA II”);

Jessica R. Giroux, Chief Legal Officer, American Securities Association, at 1 (dated Feb. 24, 2026),

https://www.sec.gov/comments/sr-finra-2026-001/srfinra2026001-714947-2237677.pdf (“ASA I”); Clifford

Kirsch and Eric Arnold, Eversheds Sutherland (US) LLP for the Committee of Annuity Insurers, at 2 (dated

Feb. 25, 2026), https://www.sec.gov/comments/sr-finra-2026-001/srfinra2026001-715747-2239634.pdf

(“CAI”); David T. Bellaire, Executive Vice President & General Counsel, Financial Services Institute, at 1

(dated Feb. 24, 2026), https://www.sec.gov/comments/sr-finra-2026-001/srfinra2026001-7150272237882.pdf (“FSI I”); Matthew Morningstar, Group Managing Director, Chief Legal Officer, LPL

Financial at 2 (dated Feb. 24, 2026), https://www.sec.gov/comments/sr-finra-2026-001/srfinra2026001712287-2235534.pdf (“LPL I”); Mark Quinn, Director of Regulatory Affairs, Cetera Financial Group, at 1

(dated Feb. 23, 2026), https://www.sec.gov/comments/sr-finra-2026-001/srfinra2026001-7105322232937.pdf (“Cetera I”); Matt Billings, President, Robinhood Financial LLC and Robinhood Securities,

LLC, at 2 (dated Feb. 24, 2026), https://www.sec.gov/comments/sr-finra-2026-001/srfinra2026001-7144892237294.pdf (“Robinhood”); Jennifer Brunner, Alicia Strout, Susan La Fond, and Gordon Taylor, Chief

Compliance Officers, ACA Foreside, at 1 (dated Feb 24, 2026), https://www.sec.gov/comments/sr-finra2026-001/srfinra2026001-715308-2238374.pdf (“ACA”); Seth A. Miller, General Counsel, President,

Advocacy & Administration, Cambridge Investment Research, Inc., at 2 (dated Feb. 24, 2026),

https://www.sec.gov/comments/sr-finra-2026-001/srfinra2026001-712247-2235514.pdf (”Cambridge I”);

Katherine M. Flouton, CEO, PKS Securities (dated Feb. 24, 2026), https://www.sec.gov/comments/sr-finra2026-001/srfinra2026001-716667-2242714.pdf (“PKS”); Elissa Germaine and Christine Lazaro,

Supervising Attorneys, Securities Arbitration Clinic at St. John’s University School of Law, at 1 (dated Feb.

24, 2026), https://www.sec.gov/comments/sr-finra-2026-001/srfinra2026001-715267-2238295.pdf (“St.

John’s Law”); Frank C. Lawrance, Wealth Advisor, Seacrest Wealth Management, at 1 (dated Feb. 21,

2026), https://www.sec.gov/comments/sr-finra-2026-001/srfinra2026001-712989-2236235.pdf

(“Lawrance”); Ben Shamberger, Independent Financial Advisor, at 1-2 (dated Feb. 21, 2026),

https://www.sec.gov/comments/sr-finra-2026-001/srfinra2026001-708847-2231674.pdf (“Shamberger”);

Ryan Naugle, Independent Financial Advisor, Advice & Planning Services, at 2 (dated Feb. 22, 2026),

https://www.sec.gov/comments/sr-finra-2026-001/srfinra2026001-708347-2229754.pdf (“A&P Services”);

Jaime Benedetti, Managing Partner, BEAM Wealth Advisors (dated Feb. 23, 2026),

https://www.sec.gov/comments/sr-finra-2026-001/srfinra2026001-2231114.htm (“Benedetti”); Form Letter

A, https://www.sec.gov/comments/SR-FINRA-2026-001/srfinra2026001-typea.htm; Form Letter B,

https://www.sec.gov/comments/SR-FINRA-2026-001/srfinra2026001-typeb_1.htm; Form Letter C,

https://www.sec.gov/comments/SR-FINRA-2026-001/srfinra2026001-typec_0.htm; and Form Letter D,

https://www.sec.gov/comments/SR-FINRA-2026-001/srfinra2026001-typed_0.htm.

requirements and member obligations would promote efficiency and allow compliance personnel

to focus on higher-risk activities.101

Specifically, commenters supported the proposed requirement under FINRA Rule

3290(c)(1) and (d)(1) that a member assess whether a proposed activity involves a customer of

the registered person or associated person, respectively, rather than a customer of the member.102

One of these commenters stated that the more limited assessment would establish an obligation

tied to a relationship that members can realistically identify and verify.103 In contrast, another

commenter recommended that FINRA expand the assessment requirements to include

consideration of whether the activity or transaction involves a customer of the member or, at a

minimum, to specify that the involvement of a member’s customer after the initial notice is a

“material change” that would require an updated notice and assessment, stating that as proposed,

the proposed rule change would increase the risk that members will fail to adequately consider

potential risks to their customers, such as the risk presented by the outside securities transactions

of an associated person employed in an operational role with access to customer information or

member systems.104

101

See, e.g., FSI I at 1, 4 (stating that streamlining two rules into proposed Rule 3290 would make a timeconsuming process for broker-dealer compliance departments more efficient and focus the efforts of

compliance personnel on activities that are likely to impact investor protection); letter from David T.

Bellaire, Executive Vice President and General Counsel, Financial Services Institute, at 2 (dated May 27,

2026), https://www.sec.gov/comments/SR-FINRA-2026-001/srfinra2026001-791919-2397389.pdf (“FSI

II”); CAI at 2; Cambridge I at 1, 2; ASA I at 1, 2; LPL I at 2; letter from Matthew Morningstar, Group

Managing Director, Chief Legal Officer, LPL Financial at 1 (dated May 27, 2026),

https://www.sec.gov/comments/SR-FINRA-2026-001/srfinra2026001-790579-2395826.pdf (“LPL II”);

Robinhood at 2 (stating that the consolidation of the OBA and PST regimes into a single rule promotes

clarity and simplifies supervisory analysis).

102

See, e.g., Cambridge I at 2, FSI I at 4, SIFMA I at 2.

103

See SIFMA I at 2.

104

See letter from Marni Rock Gibson, President and Commissioner, North American Securities

Administrators Association, Inc, at 5-6 (Feb. 24, 2026), https://www.sec.gov/comments/sr-finra-2026001/srfinra2026001-713528-2236594.pdf (“NASAA”).

FINRA responded that customer confusion and the associated reputational and legal risks

to the member are most acute when the customer has a direct relationship with the associated

person conducting the outside activity.105 As such, requiring members to assess whether the

activity involves a customer of the associated person is a targeted approach that focuses on

situations presenting heightened risk.106 Additionally, FINRA stated that requiring members to

assess whether the proposed activity involves customers of a member (as opposed to customers

of a registered person or associated person) would not meaningfully enhance investor protection,

as customers who have no relationship with the particular associated person conducting the

outside activity face lower risk of confusion about the member’s involvement in the proposed

activity.107

FINRA also stated that the proposed rule change would standardize the minimum

assessment that members must conduct upon receiving notice of registered persons’ outside

activities and associated persons’ outside securities transactions to include the assessment

required by FINRA Rule 3270, and add a new requirement to assess whether the activity

involves the customer of the registered or associated person.108 FINRA stated, however, that the

proposed rule change would not limit a member’s ability to expand the scope of its assessment if

the member determines a broader scope is appropriate for its business.109

105

See FINRA I at 7.

106

See id. at 8.

107

Id. at 7. Further, FINRA stated that a broader requirement could present practical challenges. For example,

some members may face operational challenges cross-referencing outside activity participants against the

member’s entire customer base. Id. at 7-8 and n.20.

108

Id. at 7.

109

Id. at 8.

Other commenters recommended that FINRA expand or clarify other aspects of the

assessment requirement through amendments to the proposed rule change or additional guidance.

Specifically, one commenter recommended that FINRA require members to inspect the personal

and operating bank accounts of its independent registered representatives.110 Several

commenters also made various requests for further guidance, including whether the rule would

limit a member’s ability to conduct a more robust assessment or implement safeguards beyond

the minimum required by the proposed rule change, 111 and what would constitute a “material

change” to an outside activity.112

In response, FINRA stated that the proposed rule change would not limit a member’s

ability to expand the scope of its assessment or to implement safeguards beyond the minimum

requirements established in proposed FINRA Rule 3290.113 That is, under the proposed rule

change, members would maintain the flexibility to develop and implement supervisory systems

that reflect their respective business models. For these reasons, FINRA declined to amend the

proposed rule change to provide the additional guidance requested by commenters.114 FINRA

stated, however, that if the Commission approves the proposed rule change, it will consider

providing additional guidance as appropriate.115

110

See letter from Michael Hill, Esq., Menzel & Hill, P.A., (dated Feb. 24, 2026),

https://www.sec.gov/comments/sr-finra-2026-001/srfinra2026001-713728-2236715.html (“Hill”).

111

See ASA I at 3-4; letter from Jessica Giroux, Chief Legal Officer, American Securities Association, at 2

(dated May 27, 2026), https://www.sec.gov/comments/SR-FINRA-2026-001/srfinra2026001-7916592397067.pdf (“ASA II”).

112

See Robinhood at 2-3.

113

See FINRA II at 4.

114

See FINRA I at 9; FINRA II at 4.

115

See FINRA I at 17; FINRA II at 4.

FINRA also declined to modify the proposed rule change to require members to inspect

the personal and operating bank accounts of its independent registered representatives, stating

that a blanket bank account inspection requirement would raise “significant privacy concerns and

be operationally infeasible.”116

Finally, one commenter recommended that FINRA explicitly require members to

supervise any conditions or limitations they impose on approved outside activities.117 In

response, FINRA amended the proposed rule change to include proposed FINRA Rule 3290.06

(Supervision of Imposed Conditions or Limitations) to state if a member imposes conditions or

limitations pursuant to paragraphs (c)(2), (d)(2) or (d)(3) of Proposed Rule 3290, the member

would be required to reasonably supervise compliance with such conditions or limitations.118

FINRA stated that, while this obligation has always been implicit in the existing rules, the

amendment would provide greater clarity to its members.119

Three commenters supported this amendment, stating that although this obligation was

already implicit under FINRA Rules 3270 and 3280, explicitly codifying it in proposed FINRA

Rule 3290.06 would remove ambiguity and reinforce that a member’s imposition of conditions

or limitations on an outside activity carries a supervisory obligation to assess compliance with

those conditions or limitations.120

Another commenter opposed this amendment, stating that the proposed supervisory

requirement is “irreconcilable with the legal and ethical obligations that govern law firm outside

116

See FINRA I at 8.

117

See FSI I at 3-4 (stating that supervision of any conditions or limitations is implied but stating it plainly

would provide “regulatory cover” to members that impose them).

118

See FINRA I at 16.

119

See Amendment No. 1 at 5; see also FINRA I at 16.

120

See ASA II at 3; see also SIFMA II at 2-3; FSI II at 2.

business activities” (“professional OBAs”).121 This commenter recommended that FINRA

amend proposed Rule 3290.06 to: clarify that members’ obligations to supervise conditions or

limitations on licensed professionals’ outside activities does not require such members to obtain

or review privileged material; establish safe harbors from the proposed supervision obligation for

members that impose certain good faith limitations or conditions on licensed professionals’

outside activities; and, highlight that members may seek an exemption from proposed Rule

3290.06 pursuant to proposed FINRA Rule 3290(h).122 In addition, the commenter requested

that FINRA provide guidance to help members design conditions and limitation on supervising

professional activities that would not require access to privileged information.123

In response, FINRA stated that proposed FINRA Rule 3290.06 would not require that a

member impose conditions or limitations on professional OBAs; rather, it would require that if a

member imposes conditions or limitations, it must reasonably supervise for compliance with the

conditions or limitations.124 As such, members would have discretion to determine whether to

impose any conditions or limitations, and if they do, what types of conditions or limitations

would be appropriate given the nature of the activity.125 FINRA also noted that proposed Rule

3290(h) would include general exemptive authority to permit FINRA staff to conditionally or

unconditionally grant an exemption for good cause shown pursuant to the FINRA Rule 9600

Series.126 Consequently, FINRA stated that a general safe harbor or exemptive relief for

121

See letter from Jeffrey Burg, President, AlphaTrust Advisors, at 1 (dated May 15, 2026),

https://www.sec.gov/comments/SR-FINRA-2026-001/srfinra2026001-779208-2374616.pdf

(“AlphaTrust”).

122

Id. at 3-4.

123

See id.

124

See FINRA I at 14; FINRA II at 8.

125

See FINRA II at 8.

126

Id.

professional OBAs is not necessary.127 For these reasons, FINRA declined to modify the

proposed rule change in this respect. FINRA stated, however, that it remains open to considering

whether to provide additional guidance or exemptive relief on a case-by-case basis where

specific facts and circumstances demonstrate that such guidance or relief is appropriate.128

Commission Findings on Proposed FINRA Rule 3290(a)-(d), 3290.01,

and 3290.06

The proposed rule change is reasonably designed to establish uniform minimum

standards by which registered persons report outside activities, associated persons report outside

securities transactions, and members assess and supervise such activities. In doing so, the

proposed rule change would both maintain and build on many of the existing requirements for

the notice and assessment process in existing FINRA Rules 3270 and 3280. This approach would

permit associated persons, registered persons, and members to leverage established supervisory

practices designed to comply with existing obligations where applicable, enhancing regulatory

and compliance efficiency.

The proposed rule change would incorporate existing obligations by requiring that a

registered person or associated person provide prior written notice to the member describing in

detail the proposed outside activity or outside securities transaction, respectively, and the

person’s role therein. The proposed rule change would also add a requirement for associated and

registered persons to update their notice prior to continuing the activity in case of a material

change prior.

By enumerating the information that must be included in such notices the proposed rule

will set a minimum information requirement so that members have the information that they

127

Id.

128

Id.

need to discharge their supervisory obligations. Further, the obligation to provide an updated

prior written notice in case of a material change will help ensure that members have current

information necessary to fulfill their supervisory obligations. In addition, with respect to the

commenter’s request for guidance on what constitutes a material change, FINRA will consider

providing additional guidance as appropriate if the Commission approves the proposed rule

change.

Turning to a member’s obligations upon receiving a notice of an outside activity or

outside securities transaction, by requiring a member to assess an outside activity or outside

securities transaction, the proposed rule change provides a uniform regulatory framework with

respect to risk assessment, requiring members to consider the potential risks associated with an

outside activity or securities transaction and whether to limit, condition or prohibit the outside

activity or outside securities transaction.

Specifically, requiring a member to assess whether an activity is properly characterized

as an outside activity, rather than an outside securities transaction, or, if it is an outside securities

transaction, whether it is for selling compensation, should help members address any mistaken or

intentional mischaracterization by their associated persons, and help ensure the appropriate

obligations apply to the proposed activity.

By requiring a member to consider whether the outside activity or outside securities

transaction involves a customer of the registered person or an associated person, respectively,

rather than a customer of the member as a commenter suggested, the proposed rule change

reasonably focuses a member’s attention on the relationships where the risk of customer

confusion, and the associated reputational and legal risks to the member, are greatest—those

where the customer has a direct relationship with the registered person or associated person

engaged in the outside activity or outside securities transaction. Further, by requiring the

member to assess whether the activity or transaction would be viewed by the member’s

customers or the public as part of the member’s business, a member would be required to more

broadly consider the potential for confusion to the member’s customers or the public. Moreover,

the proposed rule would require a member to assess whether the outside activity or outside

securities transaction will interfere with or otherwise compromise the registered person’s or

associated person’s responsibilities to the member or the member’s customers, which again

imposes a broad obligation on the member to evaluate the risk of the proposed activity to the

member and the member’s customers. Finally, the obligations imposed by the proposed rule

change are a floor, not a ceiling. Accordingly, a member can expand the scope of its assessment

if the member determines a broader scope is appropriate for its business.

Also, it was reasonable for FINRA to decline to impose an overarching obligation for

members to inspect personal bank accounts of its independent registered representatives, given

that such an obligation could create privacy challenges and could be operationally difficult to

implement without a commensurate benefit to the supervisory program of the member.

Moreover, even without such an explicit requirement, a member would still be subject to its

general supervisory obligations under federal law or FINRA Rule 3110, including responsibility

to investigate and act in light of “red flags” suggesting possible misconduct such as an

undisclosed outside securities transaction.

Requiring a member to evaluate the advisability of imposing specific conditions or

limitations on a registered person’s outside activity, including where circumstances warrant,

prohibiting the activity, will require members to reasonably consider the facts and circumstances

associated with the outside activity, to evaluate the nature of the risk associated with the activity,

and to determine what conditions and limitations, if any, are appropriate, or whether the activity

should be prohibited. In doing so, the proposed rule would impose a uniform minimum

assessment process for members, while also providing flexibility to members to determine

whether to condition, limit, or prohibit an activity, based on the member’s assessment of the risks

to customers and the member presented by the activity in light of the member’s business model

and risk profile.

Further, delineating a member’s obligations related to an outside securities transaction

based on whether the associated person will receive selling compensation maintains existing

requirements under FINRA Rule 3280 and is reasonably calibrated to require the member to

focus the most supervisory and compliance resources on those activities that pose greater risks to

members and their customers. Specifically, for transactions not involving selling compensation,

the proposed rule change would reasonably impose fewer obligations—notably requiring a

member to assess the proposed transaction and acknowledge the notice—and would leave to the

member’s discretion to determine whether to impose any conditions on the transaction based on

the member’s assessment of the enumerated factors set forth in proposed FINRA Rule

3290(d)(1). For transactions involving selling compensation, however, the proposed rule change

would impose more stringent obligations on members, reflecting the increased risks associated

with an outside securities transaction involving selling compensation, and the corresponding

need for heightened scrutiny. In particular, members would be required to assess the proposed

transaction and, based on that assessment, approve (with or without limitations or conditions) or

disapprove the transaction. If a member approves a proposed securities transaction for selling

compensation, the member would be required to record the transaction on its books and records

and supervise the associated person’s participation in the transaction as if it was executed on

behalf of the member.

As the proposed rule change permits, but does not require, members to limit or condition

an outside activity or an outside securities transaction (and gives members flexibility in

determining any such limitations or conditions), and enables members to seek an exemption from

any provision of the proposed rule change for unique factual scenarios (as discussed further

below), it is reasonable for FINRA not to address all unique factual scenarios at the outset, such

as those associated with professional licenses.

In addition, as discussed more fully below, the proposed rule change would require a

member to supervise any imposed limitations or conditions on an outside activity or outside

securities transaction, which will help ensure that any limitations and conditions that a member

determines are necessary are observed. Moreover, as noted, the obligations imposed by the

proposed rule change are a floor, not a ceiling. Accordingly, the proposed rule change does not

restrict a member’s ability to limit, condition, or prohibit any outside activities or outside

securities transactions where the member has determined such a prohibition is appropriate for its

own risk management.

Finally, by permitting members to develop a written allocation agreement regarding

regulatory obligations for an associated person’s participation in an outside securities transaction

involving selling compensation, the proposed rule change promotes regulatory efficiency and

minimizes duplicative regulatory oversight, while preserving investor protection.

For these reasons, the proposed rule change is reasonably designed to prevent fraudulent

and manipulative acts and practices, to promote just and equitable principles of trade, and, in

general, to protect investors and the public interest.

Proposed Definition of Investment-Related Activity

As stated earlier, the obligations of proposed FINRA Rules 3290(a)-(d) are triggered

based on the participation of a member’s associated person in “investment-related activity.” As

originally proposed, the term would have been defined as “pertaining to financial assets,

including securities, crypto assets, commodities, derivatives (such as futures and swaps),

currency, banking, real estate or insurance.” The term would have included but not have been

limited to, “acting as or being associated with a broker-dealer; issuer; insurance agent or

company; investment company; investment adviser; futures commission merchant; commodity

trading advisor; commodity pool operator; municipal advisor; futures sponsor; bank; savings

association; or credit union.”129 The proposed definition also included “an associated person’s

participation in any manner in a personal investment involving a securities transaction,

sometimes referred to as “buying away,” other than transactions indicated in proposed FINRA

Rule 3290(g)(3)(A).”130

Many commenters supported the proposed definition of “investment-related activity” as

originally proposed, stating that it would streamline the process of reporting outside activities by

eliminating the obligation to report routine activities (such as volunteer youth sports coaching,

serving on a local civic board, and farming) that do not cause harm to members or investors and

the reporting of which diverts member resources.131 In particular, commenters stated that the

129

See proposed FINRA Rule 3290(f)(3)(A).

130

See supra note 51.

131

See Form Letter A (identifying volunteer youth sports coaching, serving on a local civic board, and farming

as examples of such low risk activities); Form Letter B (stating the definition focuses reporting

requirements on activities that matter for investor protection and removes obligations to report low-risk

activities); FSI I at 4 (noting that narrowing the focus to investment-related activities will benefit investor

protection by allowing compliance personnel to spend their time on higher-risk activities); Robinhood at 2

(stating that the focus on investment-related activities will reduce unnecessary burdens while maintaining

core investor protections of the existing FINRA Rules 3270 and 3280). See also CAI at 2; LPL II at 1-2;

current reporting requirements require members to expend compliance resources on reviewing

disclosures of low-risk, non-financial activities that ultimately result in increased costs for

financial advisors and their clients.132

Some commenters requested that the proposed definition be broadened, narrowed, or

clarified.133 More specifically, with respect to broadening the definition, some commenters

opposed the proposed definition as too narrow, stating that disclosures of OBAs should be robust

and not limited to investment-related activity in order to ensure that members can evaluate the

OBAs for potential conflicts of interest and the risk of securities fraud.134 One commenter stated

ACA at 1-2. Commenters also recommended that FINRA amend Form U4 to align with the proposed rule

change because requiring registered representatives to disclose non-investment-related outside activities

pursuant to Question 14 of Form U4 would negate the benefits of the proposed rule change. See, e.g.,

SIFMA I at 2; SIFMA II at 3; see also CAI at 3; FSI I at 5; NASAA at 2, n.5; Robinhood at 2. In response,

FINRA declined to amend the proposed rule change, stating that Form U4 disclosures are outside the scope

of the proposed rule change; but FINRA also stated that it would endeavor to work with the Commission

and state regulators to harmonize the Form U4 disclosure obligations where appropriate. See FINRA I at

16; FINRA II at 8-9. FINRA reasonably declined to amend the proposed rule change in response, as the

comment is outside the scope of the proposed rule change.

132

See, e.g., Form Letter B; SIFMA II at 2; see also Robinhood at 2 (stating that narrowing the proposed rule

change to investment-related activities reduces the administrative and operational burdens of reporting lowrisk activities).

133

See, e.g., CAI at 3; NASAA at 2-3; St. John’s Law at 2; ASA I at 1.

134

See, e.g., letters from Michael C. Bixby, President, Public Investors Advocate Bar Association (“PIABA”),

at 9 (dated Feb. 18, 2026), https://www.sec.gov/comments/sr-finra-2026-001/srfinra2026001-7049872220895.pdf (“PIABA I”); Michael C. Bixby, President, PIABA, at 2 (dated June 10, 2026),

https://www.sec.gov/comments/SR-FINRA-2026-001/srfinra2026001-811619-2471170.pdf (“PIABA II”);

Nicholas J. Guiliano, The Guiliano Law Group, at 2-3 (dated Feb. 24, 2026),

https://www.sec.gov/comments/sr-finra-2026-001/srfinra2026001-715187-2238215_0.pdf (“Guiliano”);

Courtney M. Werning, Principal, Meyer Wilson Werning, at 1 (dated Feb. 19, 2026),

https://www.sec.gov/comments/sr-finra-2026-001/srfinra2026001-706827-2225236.pdf (“Werning”); Peter

J. Mougey, Levin Papantonio Proctor Buchanan O’Brien Barr Mougey P.A., at 1 (dated Feb. 25, 2026),

https://www.sec.gov/comments/sr-finra-2026-001/srfinra2026001-716067-2240135.pdf (“Mougey”);

Samuel B. Edwards, Shepherd Smith Edwards & Kantas, LLP, at 1-2 (dated Feb. 19, 2026),

https://www.sec.gov/comments/sr-finra-2026-001/srfinra2026001-706147-2223534.pdf (“Edwards”);

Robert Savage, Savage Villoch Law, PLLC, at 1 (dated Feb. 19, 2026), https://www.sec.gov/comments/srfinra-2026-001/srfinra2026001-706367-2223934.pdf (“Savage”); Robert H. Rex, Esq., Rex Securities Law,

at 1-2 (dated Feb. 19, 2026), https://www.sec.gov/comments/sr-finra-2026-001/srfinra2026001-7061882223574.pdf (“Rex”); Richard A. Lewins, Lewins Law, PC, at 1-2 (dated Feb. 19, 2026),

https://www.sec.gov/comments/SR-FINRA-2026-001/srfinra2026001-706327-2223876.pdf (“Lewins”);

Melinda Jane Steuer, at 1 (dated Feb. 19, 2026), https://www.sec.gov/comments/sr-finra-2026001/srfinra2026001-706547-2224354.pdf (“Steuer”).

in particular that the boundary between investment-related and non-investment-related activity is

rarely clear, so restricting the type of activities that could be reported to, and assessed by,

members, would create gaps in supervision that could obscure misconduct.135 One commenter

opposed the definition because it excluded significant categories of agent conduct that may pose

risks to investors.136 One commenter recommended broadening the proposed definition to

include, among other things, activities pertaining to money transmission, collectibles, and

lending, and to add the phrase “but not limited to” before the list of examples to clarify that the

examples are illustrative rather than exhaustive.137 Another commenter recommended

broadening the proposed definition to include, among other things, financial planning, tax

advice, and business advice, stating that investors could perceive these activities as part of a

member’s business.138

By contrast, one commenter suggested narrowing the proposed definition to securities

transactions in order to exclude transactions with which a member may not have familiarity, such

as transactions in non-securities insurance or banking products.139 Another commenter

suggested narrowing the proposed definition to exclude fundraising for non-profit organizations

and the receipt of residual insurance commissions.140

135

See Werning at 1.

136

See letter from William Galvin, Secretary of the Commonwealth, Commonwealth of Massachusetts, at 3

(dated Feb. 24, 2026), https://www.sec.gov/comments/sr-finra-2026-001/srfinra2026001-7139872236877.pdf (“Massachusetts”).

137

See NASAA at 2-3.

138

See St. John’s Law at 2 (stating that including these activities within the definition of “investment‑related

activity” would help avoid confusion and potential conflicts regarding the nature of such services); see also

Massachusetts at 3 (stating that the proposed rule change excludes consulting, legal, tax, and marketing

functions, as well as accountancy and financial control positions that can be precursors to larger fraudulent

activity).

139

See LPL I at 3.

140

See CAI at 3.

With respect to clarifying the proposed definition, one commenter requested guidance

regarding the scope of categories such as banking, insurance, and real estate.141 Another

commenter requested guidance regarding whether the proposed definition included real estate,

and in particular rental properties.142

In response to commenters generally opposed to the proposed definition because they

viewed it as too narrow, leading to an unduly limited application of the proposed rule change’s

operative provisions, FINRA stated that the framework under current FINRA rules, in which all

OBAs, including those that are non-investment-related, are reported creates significant

compliance burdens without commensurate investor protection benefits.143 FINRA also stated

that by eliminating the notice and assessment requirements for non‑investment‑related activities,

which present minimal investor protection concerns, the proposed rule change would free

members to focus resources and attention on activities more likely to involve potential customer

confusion or harm.144 FINRA stated that members would still be required to maintain a system

to supervise activities that is reasonably designed to achieve compliance with applicable

securities laws and regulations and FINRA rules.145 In addition, FINRA stated that the proposed

definition expressly encompasses “all activities pertaining to financial assets” even if not

individually listed, and clarified that the listed examples in the proposed definition are not

exclusive.146 Further, FINRA stated that members would retain discretion to prohibit or

141

See Robinhood at 3.

142

See ASA I at 3; ASA II at 3-4.

143

See FINRA I at 3.

144

Id.

145

Id. at 12-13, n.36.

146

Id. at 4.

condition activity based on risk.147 For these reasons, FINRA stated that the scope of the

proposed definition strikes the right balance regarding disclosure of activities that may pose a

greater risk to the investing public and members.148 As such, FINRA declined to amend the

proposed rule change. However, FINRA also stated if the Commission approves the proposed

rule change, it will consider providing additional guidance regarding the scope of investmentrelated activity as appropriate.149

FINRA also responded to comments about the coverage of specific activities. In

response to comments regarding broadening the scope of the definition to include specific

activities, such as money transmission and financial planning, FINRA stated that the list of

activities in the proposed definition of investment-related activities was not meant to be

exhaustive and therefore activities pertaining to financial assets and other related roles or

associations would be covered even if not expressly listed among the examples in the proposed

definition. As such, FINRA stated the proposed definition already captures money transmission,

lending, collectible activity, and financial planning to the extent they pertain to financial

assets.150 Nevertheless, FINRA amended the proposed rule change to add both the broader

phrase “money services business” to provide regulatory clarity and the phrase “but not limited

to” before the list of examples in proposed Rule 3290(f)(3) to confirm that the listed examples

are illustrative rather than exhaustive.151 FINRA also stated that the proposed definition already

147

Id. at 12.

148

Id. at 5.

149

Id. at 17; FINRA II at 4.

150

See FINRA I at 4-5.

151

Id. at 2, 4-5; see also Amendment No. 1.

captures tax advice and other similar types of services to the extent that are performed

concomitant to investment-related activity.152

In response to comments requesting the exclusion of specific activities from the scope of

the proposed definition, FINRA stated that narrowing the definition to only securities

transactions would inappropriately exclude activities that present risks to investors and members,

particularly the risk that investors or the public would view the activities as part of the member’s

business.153 With regard to excluding fundraising activities for non-profit organizations, FINRA

stated that depending on the specific facts and circumstances, fundraising activity could be

investment-related; as such, excluding all fundraising for non-profit organizations from the

proposed definition could exclude activities that present risks to investors and members.154 With

respect to comments seeking to exclude residual insurance commissions, FINRA stated that

FINRA Rules 2320 and 2341 already address the receipt of residual insurance commissions,

because those rules prohibit associated persons of a member from accepting any compensation in

connection with the outside sale and distribution of variable contracts or investment company

securities.155 With respect to comments seeking clarity regarding real estate and particularly

rental properties, FINRA stated that real estate is expressly included in the definition of

investment-related activity and would be subject to the proposed rule change unless such activity

met the exclusion in proposed Rule 3290(g)(3)(C) for a main home and up to two secondary

homes.156

152

Id. at 5.

153

Id. at 6 (citing the example of a registered representative selling fixed annuities, crypto assets or

commodities away from the member as particular risks).

154

Id.

155

Id.

156

See FINRA I at 6; FINRA II at 3.

In response to comments that the proposed definition lacks clarity and would cause

registered persons to make subjective determinations, FINRA explained that the proposed

definition expressly covers “all activities pertaining to financial assets,” including those that are

not securities-related, and that the examples cited are not exclusive.

Also in response to comments, FINRA proposed a clarifying amendment to make explicit

the breadth of the definition with respect to money services business and to confirm that the

listed examples are illustrative rather than exhaustive. In addition, FINRA further stated that the

definition captures activities related to capital raising, lending, financial planning, selling private

funds, investment partnerships, and crypto-asset development, promotion or market

intermediation, and that consulting, marketing, accounting, legal and tax advice services

concomitant to investment-related activity would also be covered.157 With the proposed

amendment and statements, FINRA clarified that the proposed definition should be interpreted

broadly.

The proposed rule change reasonably focuses members’ oversight of outside activities on

those that present the greatest potential harm to members or investors. The proposed definition

of investment-related activity is designed to scope into the operative provisions of proposed

FINRA Rule 3290 associated persons’ activities where the risk associated with the activity, such

as the potential for customer confusion about the registered person and their broker-dealer’s

involvement in the activity, is most acute. Although excluding any category of activity from the

scope of the proposed rule may result in a member having less visibility into those activities,

members have limited compliance resources, and it is thus reasonable for FINRA to adopt a riskbased approach by narrowing the scope of reportable activities to those with greater potential for

157

See FINRA I at 4.

harm to investors and to the member. Moreover, members would still be required to maintain a

system to supervise activities that is reasonably designed to achieve compliance with applicable

securities laws and regulations and FINRA rules. In that regard, members could impose

reporting requirements on activities that do not fall within the definition of investment-related

activity, or prohibit or condition activities, as appropriate. Additionally, nothing in the proposed

rule change would alter the well-settled principle that members must investigate “red flags”

indicating problematic activities.

The proposed definition would broadly cover activities pertaining to financial assets,

subject to certain targeted exclusions, which are more likely to involve potential customer

confusion or harm: activities that are either directly securities-related or otherwise associated

with common financial services, such as insurance, banking and crypto assets.

The proposed definition of “investment-related activity” as amended is reasonably

expansive to capture and focus on activity that has greater potential to cause customer confusion

or harm to investors and to members—activities that pertain to financial assets. The proposed

definition, coupled with the clarifications and explanations offered, should provide a reasonable

compliance roadmap for both members and their associated persons, and help ensure that the

proposed rule change will result in members being notified of activities that are more likely to

expose members and investors to risk. By enabling members to redirect supervisory and

compliance resources toward higher-risk investment-related activities, including investmentrelated activities that are not securities-related, the proposed rule change should promote more

effective risk-based oversight. FINRA also indicated it would consider providing additional

guidance on the scope of investment-related activity if the proposed rule changed is approved,

where appropriate.

For these reasons, the proposed rule change is reasonably designed to prevent fraudulent

and manipulative acts and practices, to promote just and equitable principles of trade, and, in

general, to protect investors and the public interest.

Activities Treated as Outside Activities for Purposes of Proposed FINRA

Rule 3290

Associated Persons Acting as Portfolio Managers and Investment

Committee Members

As stated above, proposed FINRA Rule 3290.02 states that an associated person would

not be considered to be participating in an outside securities transaction to the extent that the

associated person’s activities are limited to acting as portfolio manager or investment committee

member for registered investment companies (e.g., mutual funds, exchange traded funds, unit

investment trusts, or registered closed-end funds), unregistered investment companies, business

development companies, real estate investment trusts, and entities that are recognized as tax

exempt. Such activity would be considered an outside activity of a registered person. However,

the proposed exception would not include an associated person’s activities related to purchasing

or selling such entities’ shares, which would be considered outside securities transactions unless

otherwise excluded under proposed FINRA Rule 3290(g). FINRA Rule 3290.02 would codify

FINRA’s staff positions on member requirements applicable to these activities.158

One commenter opposed the proposed rule change as too broad, stating that associated

persons engaged in the activities described above are subject to a range of conflicts, including

compensation-related conflicts, as well as other risks and thus there should not be a per se

exclusion of these activities from treatment as outside securities transactions and the associated

158

See Notice at 5006.

requirements to supervise and maintain records of that activity.159 In the context of a tax-exempt

organization, this commenter stated that there may be risks and conflicts that could harm the

organization, particularly since these roles may also pay substantial compensation.160

In response, FINRA stated that the activities deemed to be outside activities under

proposed Rule 3290.02 typically involve management of third-party capital with associated

fiduciary duties and regulatory oversight, and thus do not present the same level of risk as direct

participation in securities transactions.161 As such, requiring the associated person to notify its

members of the activity and the member to assess the proposed activity is sufficient to enable

members to evaluate any associated risks.162 Further, FINRA stated that members retain

discretion to impose conditions or limitations on the activity based on the member’s evaluation

of the particular risk, and to the extent a member does impose conditions or limitations on the

activity, the member would be required to supervise compliance with the conditions or

limitations under proposed FINRA Rule 3290.06.163 Additionally, if the associated person

begins selling fund shares for compensation, shifting from a governance or management role to a

sales capacity, then the proposed rule change’s approval, member supervision and recordkeeping

requirements would apply.164 FINRA also stated that the proposed rule change is consistent with

how FINRA staff has interpreted FINRA Rules 3270 and 3280.165

159

See Massachusetts at 4.

160

Id.

161

See FINRA I at 10.

162

Id.

163

See proposed FINRA Rule 3290.06; FINRA I at 10.

164

See FINRA I at 10.

165

Id.

The proposed rule change, which codifies FINRA’s current treatment of these activities

under existing FINRA Rules 3270 and 3280, reasonably treats certain limited activities of an

associated person who acts as a portfolio manager or investment committee member for

specified entities as outside activities of a registered person, subject to the notice and member

assessment in proposed FINRA Rule 3290(a) and (c), rather than as outside securities

transactions, subject to the notice, assessment, and applicable approval requirements in proposed

FINRA Rule 3290(b) and (d). The proposed rule change reasonably tailors the obligations of

members and associated persons in light of the risk presented by the activity. For example,

portfolio managers and investment committee members of registered investment companies are

subject to regulatory oversight under the Advisers Act and the Investment Company Act of 1940

(“Investment Company Act”) or oversight by state regulators, as applicable.

Treating this activity as an outside activity is designed to help ensure that the member is

aware of the proposed activity, assesses the associated risks, and imposes conditions and

limitations (including prohibiting the activity) based on its assessment. Further, proposed

FINRA Rule 3290.06 would explicitly impose a new requirement for the member to supervise

compliance with any conditions or limitations. Finally, if the activity involves selling shares for

compensation, the additional notice, assessment, and approval obligations applicable to outside

securities transactions would apply to address the additional risks presented by that activity. For

these reasons, the proposed rule change is reasonably designed to prevent fraudulent and

manipulative acts and practices, to promote just and equitable principles of trade, and, in general,

to protect investors and the public interest.

Associated Person Activity at an Unaffiliated RIA

As stated above, proposed FINRA Rule 3290.03 states that an associated person’s

activity at an unaffiliated RIA registered either with the Commission under Advisers Act Section

203 or with a state securities commission (or any agency or office performing like functions)

would be considered an outside activity of a registered person and not an outside securities

transaction for purposes of proposed FINRA Rule 3290. As a result, the associated person

would be required to provide prior written notice of such activity under proposed FINRA Rule

3290(a), and the member would be required to conduct an assessment pursuant to the criteria set

forth in proposed FINRA Rule 3290(c), but the member would not be required to supervise or

keep records of that activity.166 FINRA stated that as a result, the proposed rule change would

“revise[] the member obligations imposed via a series of Notices to Members issued in the

1990s.”167

The majority of commenters supported the proposed rule change,168 generally stating that

activities at unaffiliated RIAs are already effectively regulated by the Commission and state

166

See Notice at 5006.

167

See supra note 56; Notice at 5006.

168

See Form Letters A, B, C and D; Cetera I at 1-2; letters from Mark Quinn, Director of Regulatory Affairs,

Cetera Financial Group, at 1-2 (dated May 26, 2026), https://www.sec.gov/comments/SR-FINRA-2026001/srfinra2026001-789421-2394167.pdf (“Cetera II”); Mark Quinn, Director of Regulatory Affairs, Cetera

Financial Group, at 1-2 (dated June 10, 2026), https://www.sec.gov/comments/SR-FINRA-2026001/srfinra2026001-815939-2484510.pdf (“Cetera III”); Gail Bernstein and Monique Botkin, General

Counsel and Head of Public Policy and Associate General Counsel, Investment Adviser Association, at 1

(dated Feb. 24. 2026), https://www.sec.gov/comments/sr-finra-2026-001/srfinra2026001-7150902238074.pdf (“IAA”); CAI at 2; LPL I at 2; SIFMA I at 1-2; letters from Doug Baxley, Chief Compliance

Officer, Merit Financial Advisors, at 1 (Dated Feb. 22, 2026), https://www.sec.gov/comments/sr-finra2026-001/srfinra2026001-708947-2231755.pdf (“Baxley”); John Ramirez, Financial Advisor, Woodlands

Portfolio Management, at 1 (dated Feb. 22, 2026), https://www.sec.gov/comments/sr-finra-2026001/srfinra2026001-708307-2229695.pdf (“Ramirez”); Cline E. Reasor, Managing Partner, Gratus Wealth

Advisors, LLC, at 2 (dated Feb. 24, 2026), https://www.sec.gov/comments/sr-finra-2026001/srfinra2026001-713067-2236294.pdf (“Reasor”); David Gutierrez, Gutierrez Wealth Advisory, at 1

(dated Feb. 24, 2026) https://www.sec.gov/comments/sr-finra-2026-001/srfinra2026001-7144272237214.pdf (“Gutierrez”); Scott R. Solod, Chief Compliance Officer, Hammond Iles Wealth Advisors, at 1

(dated Feb. 24, 2026) https://www.sec.gov/comments/SR-FINRA-2026-001/srfinra2026001-7125672235796_0.pdf (“Solod”); Timothy E. Flatley, President & CEO, Sterling Investment Advisors, Ltd., at 1

(dated Feb. 23, 2026) https://www.sec.gov/comments/sr-finra-2026-001/srfinra2026001-712951-

regulators, making the existing requirements duplicative.169 As such, commenters stated that the

existing framework creates a situation in which compliance resources are spent on redundant

review rather than investor protection.170 Commenters also stated that the existing requirements

create an uneven regulatory landscape between broker-dealers and investment advisers because

registered investment adviser firms without FINRA-registered personnel are not subject to the

additional layer of FINRA regulation.171 Other commenters stated that the existing obligation to

supervise unaffiliated RIA activity of their associated persons exposes members to an

unreasonable liability risk in the event of investor losses stemming from advice provided by the

unaffiliated RIA firm.172 Finally, several supportive commenters stated that the proposed rule

2236161.pdf (“Flatley”); Brian Nguyen, Twin Peaks Wealth Advisors, at 1 (dated Feb. 22, 2026),

https://www.sec.gov/comments/sr-finra-2026-001/srfinra2026001-711028-2233350.pdf (“Nguyen”);

Michael McLane, Owner, Redwood Financial Planning at 2 (dated Feb. 22, 2026),

https://www.sec.gov/comments/sr-finra-2026-001/srfinra2026001-708427-2229934.pdf (“Redwood”);

Shamberger at 1; A&P Services at 1; Benedetti at 1; Lawrance at 1.

169

See Form Letter A; SIFMA II at 2-3; Gutierrez at 1; Lawrance at 1; Solod at 1; Flatley at 1; Baxley at 1;

Ramirez at 1.

170

See Form Letter B. See also Shamberger at 1; Naugle at 1; Benedetti at 1; Cetera III at 3-4 (stating recently

adopted requirements, under Regulation Best Interest and Form CRS, require disclosure to investors of

information that should eliminate any potential customer confusion regarding the role and capacity of a

representative, which FINRA Rule 3280 was adopted to prevent); letter from Jamal Mahmood, Certified

Financial Planner, Main Street Financial Solutions (dated Feb. 24, 2026),

https://www.sec.gov/comments/sr-finra-2026-001/srfinra2026001-2238614.htm (“J. Mahmood ”).

171

See Form Letters C and D; Reasor at 2; Nguyen at 1; Redwood at 2; IAA at 1-3; Baxley at 1; Ramirez at 1.

172

See Form Letter A, see also IAA at 3 (stating that members’ inability to obtain such information subjects

them to potential regulatory responsibility and liability without providing adequate means to protect

themselves); CAI at 2.

change would help eliminate privacy concerns173 and other barriers to regulatory compliance

caused by the current rules.174

Commenters opposed to the proposed rule change stated that investment adviser

oversight by the Commission or state regulators is an inadequate substitute for broker-dealer

supervision,175 with some noting in particular the length of time that may pass between

Commission or state examinations of advisers.176 One commenter also expressed concern about

possible rule changes by the Commission that could lead to further reduced frequency of

examinations and other regulatory obligations of some investment advisers, which the

commenter believes would result in differing regulatory regimes based on adviser size.177

173

See Reasor at 1 (stating that the current rules require associated persons registered with broker-dealers and

with investment advisers to share their advisory clients’ non-public personal information with unaffiliated

broker-dealers that have no advisory relationship with those clients). See also Form Letter D; letter from

Scott Wallschlaeger, MPPL Financial, at 1-2 (dated Feb. 22, 2026), https://www.sec.gov/comments/sr-finra2026-001/srfinra2026001-710028-2232575.pdf (“MPPL Financial”) (stating that trust is fundamental to the

fiduciary relationship between an advisor and client and that the confidentiality of the advisor-client

relationship is protected under federal law, including Regulation S-P); CAI at 2; PKS at 1; Gutierrez at 1;

Redwood at 1.

174

See ACA at 2 (stating that the proposed rule change would eliminate the difficulty of registering

prospective registered representatives who work for unaffiliated investment advisers that are unwilling to

provide a broker-dealer with the information necessary for the member to supervise such activity as

required under FINRA Rule 3280); IAA at 3 (acknowledging that members may have challenges fulfilling

their regulatory obligations under the current rules because they lack access to information necessary to

meaningfully supervise outside unaffiliated investment adviser activities); see also Gutierrez at 1-2; J.

Mahmood.

175

See letter from Scott Eichhorn and Melanie Cherdack, Director and Associate Director, University of

Miami Investor Rights Clinic, at 2-3 (dated Feb. 24, 2026), https://www.sec.gov/comments/sr-finra-2026001/srfinra2026001-714428-2237215.pdf (“Miami Clinic”); Cambridge I at 3; letter from Jeffrey R. Sonn,

Esq., Sonn Law Group P.A., at 2-3 (dated Feb. 20, 2026), https://www.sec.gov/comments/sr-finra-2026001/srfinra2026001-706987-2225454.pdf (“Sonn I”). See also letter from Seth A. Miller, General Counsel,

President, Advocacy & Administration, Cambridge Investment Research, Inc., at 3 (dated May 27, 2026),

https://www.sec.gov/comments/SR-FINRA-2026-001/srfinra2026001-792039-2397586.pdf (”Cambridge

II”) (stating that if the existence of regulatory oversight by the SEC or states and RIAs being subject to

fiduciary duty was sufficient to ensure effective supervision of this activity then there would not be

enforcement actions showing that misconduct “persists for years before detection”).

176

See Cambridge I at 3; see also letter from John S. Burke, Esq., JSB Law, at 2-3 (dated Feb. 20, 2026),

https://www.sec.gov/comments/sr-finra-2026-001/srfinra2026001-707867-2226717.pdf (“Burke”); Miami

Clinic at 2-3; Cambridge II at 3.

177

See Cambridge I at 4; Cambridge II at 6-7 (raising concerns that approval of the proposed FINRA rule

change, combined with the potential adoption of Commission rules that would increase the thresholds for

Commenters also stated that broker-dealers have unique insights into the day-to-day

activities of their associated persons and thus eliminating the member supervision and

recordkeeping requirements associated with unaffiliated investment adviser activities would

fundamentally weaken investor protections.178 More specifically, commenters stated that the

proposed rule change would remove one of the most effective mechanisms for detecting fraud,

conflicts of interest, and undisclosed securities activity by associated persons,179 and that

reducing the reporting requirements would make it more likely that illicit conduct would go

unreported and unsupervised.180 One commenter stated that the proposed rule change is

RIAs being classified as a “small entity” under Commission rules and/or increase the asset threshold for

investment advisers being required to register with the Commission, would further fragment oversight of

RIAs and weaken consistency in investor protection).

178

See NASAA at 6; see also PIABA I at 4-5, 8; PIABA II at 2; Cambridge I at 6; Sonn I at 2-3;

Massachusetts at 2; letters from David Meyer, Founder and Managing Principal, Meyer Wilson Werning, at

2 (dated Feb. 22, 2026), https://www.sec.gov/comments/sr-finra-2026-001/srfinra2026001-7081472229414.pdf (“Meyer”); Alex Rogers, Attorney at Law, (dated Feb. 24, 2026),

https://www.sec.gov/comments/sr-finra-2026-001/srfinra2026001-714647-2237394.html (“Rogers”). See

also Cambridge I at 5; Cambridge II at 4-5 (stating that removing supervisory obligations over unaffiliated

RIA activity fails to reduce a member’s litigation or arbitration risk and creates incentives for associated

persons to affiliate with the member who imposes only the minimum requirements of the proposed rule

change).

179

See Sonn I at 2; see also letter from Glenn Mazer, Mazer Law Firm PC (dated Feb. 20, 2026),

https://www.sec.gov/comments/sr-finra-2026-001/srfinra2026001-707567-2226334.html (“Mazer”); Burke

at 3; letter from Nico Banks, co-chair of the PIABA Arbitration Committee, Banks Law Office (dated Feb.

19, 2026), https://www.sec.gov/comments/sr-finra-2026-001/srfinra2026001-706447-2224014.pdf

(“Banks”)

180

See Mougey at 1; Cornish at 1; Bingham at 1; Pearce at 1-2; Vannoy at 1; Schwartz at 2; Wojciechowski at

1; Muzaurieta at 1; Ciaccio at 1; Rosenfield at 1; Iorio at 1; Spray at 1; Brewer at 1; Saxon at 1; Evans at 1;

Peiffer at 1; Simms at 1; Varnavides at 1-2; Rapaport at 1; letter from Thomas D. Mauriello, Esq.,

Mauriello Law Firm, at 1 (dated Feb. 24, 2026), https://www.sec.gov/comments/sr-finra-2026001/srfinra2026001-714467-2237275.pdf (“Mauriello”); Kane at 1; Cosgrove Letter at 1; and letter from

Adolfo Anzola, Esq., Sonn Law Group P.A., at 1 (dated Feb. 24, 2026), https://www.sec.gov/comments/srfinra-2026-001/srfinra2026001-714047-2236935.pdf (“Sonn II”). See also letters from Mark Pugsley, The

Anti-Fraud Coalition (dated Feb. 20, 2026), https://www.sec.gov/comments/sr-finra-2026001/srfinra2026001-707627-2226454.html (“Pugsley”); Reema Mahmood, Individual (dated Jun. 12,

2026), https://www.sec.gov/comments/SR-FINRA-2026-001/srfinra2026001-2488330.htm (“R.

Mahmood”). A commenter also stated that FINRA did not adequately quantify in its economic analysis the

costs of unsupervised outside activity on investors, both in terms of existing gaps in supervision and the

additional gaps the proposed rule would create. See Burke at 5. In response, FINRA stated that

unaffiliated RIA activity is subject to supervision by the unaffiliated RIA and overseen by other regulators,

and that any additional investor protections arising from member supervision of these activities may be

limited because of the difficulty the member may have in obtaining complete information from the

inconsistent with the Commission’s authority under Exchange Act Section 15(b)(4)(E) to impose

sanctions on a firm for failing to reasonably supervise a person subject to the firm’s supervision

who commits a violation of the federal securities laws, including the Advisers Act.181 This

commenter stated that there is no authority in the Exchange Act that permits a broker-dealer to

delegate this supervisory responsibility to another body or that allows FINRA to exempt

members from these requirements because another securities statute or regulatory body covers

the same activity.182

Other commenters opposing the proposed rule change stated that members do not lack

sufficient information to meaningfully supervise unaffiliated RIA activities, contending that the

securities regulatory framework has never required members to have complete visibility or direct

control to meet their supervisory obligations; rather, it requires broker-dealers to maintain

reasonably designed risk-based supervisory systems.183 Similarly, commenters stated that the

privacy rationale underlying the proposed rule change are unjustified.184 Specifically, one

unaffiliated RIA. See FINRA I at 14. Additionally, FINRA believes that the assessment it conducted was

appropriate to capture the economic impact associated with the proposed rule change and in order to

directly address any potential loss in investor protections would require more granular data to quantify the

effectiveness of other regulatory regimes and then the marginal impact of additional supervision by brokerdealer firms. See FINRA I at 14. FINRA’s assessment appropriately captures the economic impacts

associated with the proposed rule change.

181

See PIABA I at 1-3, 10. See also Robert Scott Dreher, Dreher Law Firm, at 2 (dated Feb. 20, 2026),

https://www.sec.gov/comments/sr-finra-2026-001/srfinra2026001-707727-2226594.pdf (“Dreher”); Adam

J. Gana, Esq. and Adam J. Weinstein, Gana Weinstein LLP, at 2 (dated Feb. 20, 2026),

https://www.sec.gov/comments/sr-finra-2026-001/srfinra2026001-706927-2225375.pdf (“Gana

Weinstein”); William Paul Nolan, Esq., The Nolan Law Firm, at 2 (dated Feb. 21, 2026),

https://www.sec.gov/comments/sr-finra-2026-001/srfinra2026001-719187-2251614.pdf (“Nolan”); Sonn II.

182

See PIABA I at 2-3.

183

See Cambridge I at 6; see also PIABA I at 8-9.

184

See, e.g., PIABA I at 8-9; Cambridge I at 7; Cambridge II at 5-6; Form Letter D.

commenter stated that broker-dealers already handle extensive non-public personal information

and are subject to robust safeguarding requirements.185

Some commenters (including those who supported and those who opposed the proposed

rule change) recommended modifications to the proposed rule change.186 Similarly, one

commenter recommended that, if the proposed rule change is approved by the Commission,

FINRA provide guidance or supplementary material stating that a member may not ignore or

discount evidence of suspicious activities or red flags arising from activities that they do not

supervise and emphasizing that members must consider any red flags related to their associated

persons’ unaffiliated investment advisory activities as part of their core supervisory

obligations.187 Another commenter stated that practical and privacy challenges to having

members supervise the unaffiliated RIA activity of their associated persons can be addressed

through targeted safeguards, such as requiring written agreements providing the member access

to necessary records, coupled with obtaining applicable client consents.188

Additionally, a commenter stated that FINRA should tailor rather than eliminate brokerdealer responsibilities for these activities, stating that a reasonable alternative would be requiring

notice and member approval of outside advisory activities, while limiting supervisory obligations

under proposed FINRA Rule 3290 to activity involving the adviser's clients who are also

185

See Cambridge I at 7 (stating that Federal privacy regimes applicable to RIAs (including Regulation S-P)

are expressly designed to permit information sharing with service providers and affiliated parties where

there is a legitimate business purpose, subject to notice, consent, and safeguards); Cambridge II at 5-6.

186

See FSI I at 3-4; ASA II at 6; NASAA at 7; St. John’s Law at 2; Miami Clinic at 3; letter from Jason Albin,

Chapman Albin, at 2 (dated Feb. 20, 2026), https://www.sec.gov/comments/sr-finra-2026001/srfinra2026001-707507-2226238.pdf (“Albin”).

187

See NASAA at 7 n.24.

188

See Albin at 2.

customers of the member as well as advisory accounts for which the member is the custodian.189

The commenter stated that such an approach would align supervision with the interests of the

member and responsibilities to investors, while helping to mitigate concerns about access to

information, privacy, jurisdiction, and overall compliance burden.190 In the alternative, the

commenter suggested the proposed rule change should be revised to “more directly encourage

[members] to impose conditions or limitations on outside investment advisory activities when the

[member] makes certain findings in the required assessment.”191

In contrast, a supportive commenter recommended that FINRA clarify that a member

approving an associated person’s activities at an unaffiliated investment adviser is not required to

oversee compliance with any conditions or limitations imposed on those activities, unlike as

required by proposed FINRA Rule 3290.06 for conditions and limitations imposed pursuant to

proposed Rule FINRA 3290.192 Lastly, one commenter, expressing concern that the proposed

rule change would disadvantage members that exercise prudent supervision and incentivize

members to “offload supervisory risk,” suggested that if the Commission approved proposed

FINRA Rule 3290.03, the Commission should provide a safe harbor to members from regulatory

enforcement and civil liability if an unaffiliated investment adviser violates regulatory or legal

standards or harms clients.193

189

See NASAA at 7. See also St. John’s Law at 2 (stating that because unaffiliated RIA activity frequently

involves an outside securities transaction and may involve the customer of the registered person, that such

activity should either be treated as a subcategory of outside securities transactions or as a separate third

category with additional obligations closer to those proposed for outside securities transactions to ensure

adequate supervision and investor protection); Miami Clinic at 3 (recommending that FINRA consider

retaining risk-based obligations (e.g., reasonable supervision) where associated persons provide any type of

investment advice, including through a registered investment adviser).

190

See NASAA at 7.

191

Id.

192

See ASA II at 6.

193

See Cambridge II at 4-5.

In response, FINRA stated that activities at unaffiliated RIAs are fundamentally different

from other situations involving private securities transactions because activities at registered

investment advisers are already subject to established regulatory structures, and the proposed

rule change respects this allocation of regulatory responsibility.194 The proposed rule change

would thus eliminate duplicative obligations (e.g., broker-dealer supervision) without

diminishing the comprehensive oversight framework already in place.195 FINRA further stated

that the effectiveness of investment adviser regulation cannot be judged solely by examination

frequency but rather by “the full spectrum of regulatory requirements, ongoing oversight

mechanisms, internal compliance obligations, and the fiduciary duty framework applicable to

[investment advisers],” and that the Commission and state regulators are in the best position to

determine proper supervision of investment advisers based on market conditions, risk

assessments, and available resources.196

In addition, FINRA stated that members would continue to receive notice of any outside

activities at unaffiliated RIAs and retain discretion to prohibit or condition or limit such activities

based on the member’s evaluation of the associated risk.197 FINRA further stated that pursuant

to FINRA Rule 3110, members are required to investigate any red flags that suggest that

misconduct may be occurring and to act upon the results of such investigation; this would

include “red flags suggesting that an associated person is involved in an undisclosed outside

activity or that a disclosed outside activity involves undisclosed securities transactions,

194

See FINRA I at 14 (noting that unaffiliated RIAs are subject to a fiduciary duty as well as oversight from

the Commission or state regulators, as applicable).

195

Id.

196

Id.

197

Id. at 12; FINRA II at 6.

compensation not previously disclosed, or other misconduct.”198 Finally, FINRA also stated that

although it is not aware of any interpretation of Section 15(b)(4)(E) of the Exchange Act that

imposes a general obligation on broker-dealers to supervise investment advisory activity,

members are free to impose supervisory obligations on their associated persons as a condition to

participating in unaffiliated investment advisory activity.199

FINRA also declined to modify the proposed rule change to create a tailored approach for

unaffiliated RIA activities, such as creating a subcategory of outside securities transaction for

unaffiliated RIA activity, or limiting supervision to only the approved activity involving advisory

clients who are also customers of the member and to advisory accounts custodied by the

member.200 FINRA stated that the suggested approaches disregard the comprehensive regulatory

regime for RIAs.201 Further, FINRA stated that creating a tailored regime for customers who

have an advisory account custodied by the member, as suggested by commenters, would be

inconsistent with FINRA’s longstanding policy of creating rules that are business-model neutral

where possible, and could create unintended consequences depending on whether or not a

particular member requires its associated persons to execute and custody their outside securities

transactions at the member.202

With respect to the comments regarding privacy concerns and suggestions for targeted

safeguards, such as requiring written agreements between members and associated persons

engaging in unaffiliated RIA activity, FINRA stated that based on its examination experience it

198

FINRA I at 13; see also In re Ronald Pellegrino, Exchange Act Release No. 59125, 2008 SEC LEXIS 2843

(Dec. 19, 2008); FINRA II at 6.

199

See FINRA I at 14.

200

See supra discussions and note 189.

201

See FINRA I at 16.

202

Id. at 16; FINRA II at 5-6.

has found that privacy protection is a legitimate concern that raises practical hurdles for members

to obtain information regarding unaffiliated RIA activities that cannot be dismissed as a mere

“operational inconvenience” and thus managed through disclosure, information-sharing and/or

consent agreements.203 Additionally, FINRA stated that it has observed in examinations that

members have faced practical hurdles to obtaining information regarding unaffiliated RIA

activity.204 For these reasons, FINRA declined to modify the proposed rule change.

The proposed rule change reasonably treats activity performed by associated persons at

an unaffiliated RIA as an outside activity subject to the notice and member assessment

requirements in proposed FINRA Rule 3290(a) and (c), rather than an outside securities

transaction subject to the notice, assessment, and applicable approval, supervision, and

recordkeeping requirements in proposed FINRA Rule 3290(b) and (d). The proposed rule

change reasonably tailors the applicable framework to address the level of risk presented by the

activity, by recognizing existing oversight of the activity by the Commission or state regulators,

and in so doing, addresses privacy and practical challenges noted by commenters and observed

by FINRA regarding members’ ability to obtain data necessary to discharge their obligations

under existing Rules 3270 and 3280, while also providing important investor protections.

With respect to the commenter’s concern that proposed or potential future rule changes

by the Commission could further reduce the frequency of investment adviser examinations or

reduce investment advisers’ regulatory obligations, FINRA’s proposed rule change must be

assessed on whether it meets the standards set forth in the Exchange Act, including whether it is

designed to protect investors and the public interest;205 any concerns about the impacts of a

203

See FINRA I at 15; FINRA II at 7.

204

Id.

205

See Exchange Act Section 15A(b)(6).

Commission rulemaking on investor protection would be appropriately addressed in the context

of any proposed Commission rulemaking.206

Requiring members to supervise and maintain records of unaffiliated investment adviser

activities impose additional compliance costs and liability and causes significant operational and

practical challenges for members, which are more appropriately borne by the entity with

responsibility for the activity. The proposed rule change eliminates these costs and challenges

while preserving reasonable investor protection measures through the obligations imposed by

treating these activities as an outside activity.207 Specifically, the proposed rule change would

still require an associated person to provide prior written notice to his or her member detailing

the activity so that a member can make an informed decision about whether to limit, condition,

or prohibit the activity. For example, members could impose restrictions on their associated

persons as a condition to participation in the unaffiliated RIA activity, and proposed FINRA

Rule 3290.06 would require the member to supervise compliance with such conditions or

limitations.

Similarly, while the proposed rule change forgoes imposing the per se supervisory

obligations attendant with treating unaffiliated RIA activity as an outside securities transaction,

in favor of a risk-based approach, the proposed rule change does not allow members to turn a

blind eye to the risk presented by permitting such activity. Members cannot ignore evidence of

206

Further, the commenter appears to misunderstand the proposal identified, which, if adopted, would not alter

the direct obligations of investment advisers registered with the Commission or create any regulatory gap

that would weaken investor protection. See “Small Business” and “Small Organization” Definitions for

Investment Companies and Investment Advisers for Purposes of the Regulatory Flexibility Act, Release

Nos. IA-6935 and IC-35864, 91 Fed. Reg. 1107 (Jan. 12, 2026).

207

This approach is consistent with the way outside securities transactions that qualify under the GLBA or

Regulation R exceptions to broker or dealer registration are treated as an outside activity of a registered

person. See infra Section III.C.3 (Associated Person Outside Securities Activity Subject to GLBA or

Exchange Act Regulation R).

suspicious activities, as the proposed rule does not alter members’ overarching supervisory

responsibilities under applicable federal laws and FINRA rules to investigate and act upon red

flags indicating potential misconduct. Furthermore, the proposed rule change establishes a

minimum standard under FINRA rules for reasonable supervision of associated persons,

including registered persons, for compliance with relevant obligations; the proposed rule change

does not alter or supersede a member’s obligation to comply with other applicable statutory or

regulatory requirements.208 In recognition of the regulatory framework that governs activity at

registered investment advisers, the proposed rule change imposes targeted, risk-based regulatory

safeguards reasonably designed to protect investors and the public interest. In doing so, the

proposed rule change should reduce compliance burdens while facilitating investor protection.

For these reasons, the proposed rule change is reasonably designed to prevent fraudulent and

manipulative acts and practices, to promote just and equitable principles of trade, and, in general,

to protect investors and the public interest.

Associated Person Outside Securities Activity Subject to GLBA or

Exchange Act Regulation R

As stated above, proposed FINRA Rule 3290.05 states that an associated person’s

securities activity that is not subject to a contractual arrangement under proposed FINRA Rule

3290.04 but that qualifies under the GLBA or Regulation R exceptions to broker or dealer209

registration requirements would be considered an outside activity of a registered person and not

an outside securities transaction for purposes of the proposed rule. This activity would be

subject to the notice and assessment requirements in proposed FINRA Rule 3290(a) and (c), but

208

See, e.g., Exchange Act Sections 15(b)(4)(E) and 15(b)(6)(A).

209

See supra note 60.

the member would not be required to supervise or keep records on this activity. The

Commission received no comment on this aspect of the proposed rule change.

The proposed rule change is reasonably designed to treat an associated person’s outside

securities transactions that qualify under the GLBA or Regulation R exceptions to broker or

dealer registration as an outside activity. The proposed rule change tailors the outside activity

framework to address the level of risk presented by the activity by recognizing existing oversight

of the activity by the banking regulators.210

Under the proposed rule change, the member would continue to receive prior written

notice of the associated person’s activity, be required to conduct an upfront assessment, and

retain discretion to condition or limit proposed activity (or prohibit the activity) based on its

assessment. Moreover, proposed FINRA Rule 3290.06 would require the member to supervise

compliance with any conditions or limitations a member elects to impose. In this way, the

proposed rule change reasonably imposes targeted, risk-based regulatory safeguards designed to

protect investors and the public interest. For these reasons, the proposed rule change is

reasonably designed to prevent fraudulent and manipulative acts and practices, to promote just

and equitable principles of trade, and, in general, to protect investors and the public interest.

Exclusions from Proposed FINRA Rule 3290

Associated Person Activity on Behalf of a Member or an Affiliate

As stated above, proposed FINRA Rule 3290(g)(1) would exclude from proposed FINRA

Rule 3290 an associated person’s activity on behalf of a member or its affiliate.211 Proposed

210

FINRA also stated that the proposed rule change codifies FINRA staff’s existing position with respect to

this activity. See Notice at 5006.

211

Proposed FINRA Rule 3290(g)(1). FINRA stated that the exclusion would include activity such as

investment advisory activity at a member that is registered as both a broker-dealer and an investment

adviser, as well as investment advisory, insurance, or banking activity conducted at an affiliate. See Notice

at 5005.

FINRA Rule 3290(f)(1) would define “affiliate” as any entity that controls, is controlled by, or is

under common control with a member. FINRA stated that the exclusion for activity conducted

on behalf of an affiliate recognizes members’ and their control persons’ ability to implement

meaningful controls across business lines.212 According to FINRA, activity conducted on behalf

of an affiliate occurs within the scope of the person’s relationship with the broader corporate

organization and therefore does not pose the same risks as other outside activities targeted by the

proposed rule change.213 Specifically, FINRA stated that the rule’s notice process is designed to

bring external activities to the member’s attention so that risks that may not otherwise be

apparent can be evaluated by the member.214 FINRA stated that this process is unnecessary

where the activity is conducted within the corporate family, where the member can access

information about such activities through corporate governance structures, shared compliance

systems, or other internal coordination mechanisms.215

Many commenters supported the proposed rule change, generally stating that the affiliate

exclusion would create a “more targeted framework” that helps members focus their compliance

resources on outside activities that are “more likely to intersect with their supervisory

responsibilities and customer facing business.”216 More specifically, one of these commenters

stated that excluding activities at affiliated entities, where shared compliance systems already

provide oversight, would eliminate a layer of regulatory duplication that adds cost without

adding protection.217 Other commenters stated that the Advisers Act already requires investment

212

See Notice at 5006.

213

See FINRA I at 9.

214

Id.

215

Id.

216

ASA I at 2; CAI at 2; Benedetti; Shamberger at 2; A&P Services at 2; Form Letter B.

217

See Benedetti.

advisers to establish a “robust” compliance program; thus, by excluding an associated person’s

advisory activity on behalf of a member or its affiliate from proposed FINRA Rule 3290, the

proposed rule change would relieve dual registrants from “regulatory overlap” that added

complexity without improving investor protection.218

Other commenters opposed the proposed rule change.219 For example, one commenter

stated that reducing a member’s regulatory oversight of the activity of their registered and

associated persons at affiliated advisers would be a “dramatic step backward” and may eliminate

recourse for investors seeking redress for harm caused by an affiliated adviser.220 Another

commenter stated that the Exchange Act requires members to supervise all investment-related

activities of their registered representatives regardless of where those activities occur, and does

not exempt members based on their affiliates’ ability to effectively control activities across

business lines.221

One commenter who supported the proposed rule change recommended that FINRA

provide guidance on when the affiliate exclusion would apply in specific scenarios involving an

associated person’s work on behalf of a bank, credit union, or insurance company that controls, is

controlled by, or is under common control with the member.222 The commenter also requested

218

See, e.g., Form Letter B; A&P Services at 2.

219

See, e.g., Banks at 1; letter from John E. Sutherland, Brickley/Sears, P.A. at 1-2, (Feb. 25, 2026)

https://www.sec.gov/comments/sr-finra-2026-001/srfinra2026001-715687-2239515.pdf (“Brickley/Sears”);

Massachusetts at 2; PIABA I at 10.

220

Brickley/Sears at 1-2 (stating that the way to prevent this is to have the members responsible for

supervision over the activity). See also Massachusetts at 2 (stating that eliminating the supervisory

requirements over both unaffiliated and affiliated investment advisers is contrary to investor protection).

221

See PIABA I at 10; see also Banks at 1.

222

See ASA I at 5; ASA II at 5-6. Another commenter recommended that the proposed definition include

contractual networking relationships between independent broker-dealers and third-party institutions,

including banks, credit unions and insurance companies. See LPL I at 3. FINRA responded that proposed

Supplementary Material .04 already excludes an associated person’s activity that is pursuant to a contract

between a member and another entity if such activity is conducted on behalf of the member as it is within

the scope of the associated person’s relationship with the member. See FINRA I at 9-10.

that FINRA provide concrete examples of how the exclusion applies in common fact patterns,

including when a registered person’s day-to-day activity at an affiliate is covered by the

exclusion and how the exclusion applies when the affiliate is the primary employer and

association with the member is “part time or limited in scope.”223

In response, FINRA stated that the exclusion is appropriate because activity conducted on

behalf of an affiliate occurs within the scope of the person’s relationship with the broader

corporate organization and does not present the same risks that the rule is designed to address.224

Specifically, FINRA stated that the notice and assessment process, which is designed to bring

external activities to the member’s attention so that risks that may not otherwise be apparent can

be evaluated, is not necessary for activity conducted within a corporate family, where the

member can access information about such activities through corporate governance structures,

shared compliance systems, or other internal coordination mechanisms.225 In addition, FINRA

stated that rather than imposing a one-size-fits-all notice and assessment process, the exclusion

would provide a member with flexibility to determine how to manage affiliate activities and

whether any controls are appropriate, based on its business model, organizational structure, and

the specific activities involved.226 FINRA also stated that, while this exclusion is consistent with

regulatory efficiency principles, it in no way lessens a member’s general supervisory obligations

under federal law or FINRA Rule 3110 nor does it limit a member’s ability to implement

additional safeguards it determines are appropriate.227

223

ASA I at 5; ASA II at 5-6.

224

See FINRA I at 9.

225

Id.

226

Id.

227

Id. at 9-10.

With respect to the commenter’s request for additional guidance on the scope and

application of the affiliate exclusion in particular factual scenarios, FINRA confirmed that the

affiliate exclusion does not turn on whether the member or an affiliate is a registered person’s

primary employer.228 The proposed rule change would exclude from proposed FINRA Rule

3290 an associated person’s activities either on behalf of a member (e.g., investment adviser

activity conducted for a dually-registered broker-dealer/investment adviser) or its affiliate

(investment adviser, insurance or banking activity conducted at an affiliate of the member).229

Finally, FINRA stated that if the Commission approves the proposed rule change, it will consider

providing additional guidance on this and other topics as appropriate.230

The proposed rule change excluding from proposed FINRA Rule 3290 an associated

person’s activities on behalf of a member or its affiliates is reasonable given the purpose of the

rule: bringing to a member’s attention external activities of which the member may not otherwise

be aware. With respect to the associated person’s activity on behalf of the member, the proposed

rule change is reasonably designed to enhance regulatory efficiency by excluding from

duplicative obligations activity that already falls within the member’s supervisory and

compliance responsibilities under other FINRA rules (e.g., FINRA Rule 3110). With respect to

activity performed on behalf of an affiliate, it is appropriate to exclude the activity from the

proposed rule’s mandatory notice and assessment process, as it is conducted within a corporate

family, where the member should have visibility into the associated person’s conduct through the

corporate governance structure, shared compliance systems, or other internal coordination.

228

See FINRA II at 4.

229

Id.

230

Id.

As such, the proposed rule change reasonably focuses a member’s compliance function

on activities where member oversight provides the greatest investor protection benefit. In

addition, members retain the ability to impose additional measures on any such activity,

including notice requirements and placing conditions or limitations on the activity, while also

retaining their overarching supervisory obligations. Further, as noted above, the proposed rule

change does not alter or supersede a member’s obligation to comply with other applicable

statutory or regulatory requirements, nor does it address an investor’s ability to seek redress for

harm.231 As such, the exclusion reflects a reasonable approach that is designed to channel

oversight resources toward activities where the member is less likely to have visibility or

information, by permitting members to leverage internal structures to avoid unnecessarily

duplicative requirements, and providing flexibility to determine how to manage affiliate

activities in the context of those structures. For these reasons, the proposed rule change is

reasonably designed to prevent fraudulent and manipulative acts and practices, to promote just

and equitable principles of trade, and, in general, to protect investors and the public interest.

Securities Transactions Among Immediate Family Members of an

Associated Person

As stated above, proposed FINRA Rule 3290(g)(2) would exclude from proposed FINRA

Rule 3290 an associated person’s securities transactions among immediate family for which the

associated person receives no selling compensation.232 These transactions are also excluded

from the current definition of PST, and therefore not subject to the notice and assessment

231

See supra note 208.

232

Proposed FINRA Rule 3290(g)(2). Proposed FINRA Rule 3290(f)(2) would define “immediate family” to

have the same meaning as in FINRA Rule 3240(c).

requirements in existing FINRA Rule 3280.233 The Commission received no comment on this

aspect of the proposed rule change.

The proposed rule change excluding uncompensated securities transactions among

immediate family members from the obligations of proposed FINRA Rule 3290 is reasonably

designed to focus members’ supervisory and compliance resources on activities that are more

likely to raise investor protection concerns. Additionally, the exclusion from proposed FINRA

Rule 3290 does not lessen a member’s general supervisory obligations under federal law or

FINRA Rule 3110 nor limit a member’s ability to implement additional safeguards it determines

are appropriate. For these reasons, the proposed rule change is reasonably designed to prevent

fraudulent and manipulative acts and practices, to promote just and equitable principles of trade,

and, in general, to protect investors and the public interest.

Certain Personal Investments of an Associated Person

As stated above, proposed FINRA Rule 3290(g)(3) would exclude from proposed FINRA

Rule 3290 the following personal investments of an associated person: (1) securities transactions

subject to or delineated in FINRA Rule 3210 (Accounts at Other Broker-Dealers and Financial

Institutions); (2) personal investments in non-securities; and (3) the purchase, sale, rental or lease

of a main home and up to two secondary homes that are: (a) solely owned by the associated

person or the associated person and immediate family; (b) owned by the associated person as a

sole proprietorship; (c) owned by a corporation, LLC, partnership, limited partnership, or other

entity that is solely owned by the associated person or the associated person and immediate

233

See FINRA Rule 3280(e)(1) (excluding from the definition of “private securities transaction” transactions

among immediate family members as defined in FINRA Rule 5130).

family; or (d) owned by a trust with the associated person or the associated person and

immediate family as the sole beneficiaries.234

Commenters supported the proposed rule change,235 stating that the treatment of these

categories of personal investments is appropriately tailored, reflects a calibrated risk-based

approach,236 and will help members concentrate on outside activities that are more likely to

intersect with their supervisory responsibilities and customer-facing business.237 In particular,

commenters supported the real estate exclusion, stating that such activities do not raise investor

protection concerns and therefore should not be subject to reporting.238 No commenters objected

to this proposed exclusion.

The proposed rule change to exclude certain personal investments from the obligations of

proposed FINRA Rule 3290 is reasonably designed to help focus members’ compliance oversight

on activities that are more likely to raise investor protection concerns. Specifically, some of

these transactions are covered by FINRA Rule 3210, which already requires a member to consent

to an associated person’s opening an account with another member or financial institution in

which securities transactions can be effected and in which the associated person has a beneficial

interest; in addition, the associated person’s member can request data for any transaction in an

account subject to the rule. Therefore, these transactions are already subject to existing controls

under FINRA Rule 3210.239 In addition, an associated person’s personal investments in

non-securities, or, subject to specified conditions, the purchase, sale, rental or lease of a main

234

Proposed FINRA Rule 3290(g)(3)(A)-(C).

235

See ASA I at 2; Robinhood at 2.

236

See Robinhood at 2.

237

See ASA I at 2.

238

See Cambridge I at 2; see also CAI at 2; ASA I at 2; Robinhood at 2; FSI I at 1.

239

See supra note 51.

home and up to two secondary homes is a targeted exclusion for real estate activities and nonsecurities that are otherwise included in the definition of investment-related activity in proposed

Rule 3290(f). This limited exclusion reasonably recognizes the lower risks to investors and

members presented by these activities by reducing the regulatory burdens associated with such

activities. Moreover, the exclusion from proposed FINRA Rule 3290 does not lessen a member’s

general supervisory obligations under federal law or FINRA Rule 3110, nor limit a member’s

ability to implement additional safeguards it determines are appropriate. For these reasons, the

proposed rule change is reasonably designed to prevent fraudulent and manipulative acts and

practices, to promote just and equitable principles of trade, and, in general, to protect investors

and the public interest.

Treatment of Activity Subject to a Contractual Arrangement

As stated above, proposed FINRA Rule 3290.04 would exclude from proposed FINRA

Rule 3290 an associated person’s activity conducted on behalf of the member pursuant to a

contract between the member and another entity (e.g., a banking or insurance networking

arrangement) because the activity would be considered within the scope of the associated

person’s relationship with the member and therefore subject to the member’s supervisory

obligations under FINRA Rule 3110. The Commission received no comment on this aspect of

the proposed rule change.

The proposed rule change to exclude an associated person’s activity conducted on behalf

of a member pursuant to a contractual arrangement between the member and another entity is

reasonably designed to enhance regulatory efficiency by excluding from duplicative obligations

activity that already falls within the member’s supervisory and compliance responsibilities under

other FINRA rules (e.g., FINRA Rule 3110). For these reasons, the proposed rule change is

reasonably designed to prevent fraudulent and manipulative acts and practices, to promote just

and equitable principles of trade, and, in general, to protect investors and the public interest.

Recordkeeping

As stated above, proposed FINRA Rule 3290(e) would require a member to keep a record

of its compliance with the obligations under proposed FINRA Rule 3290 and preserve this record

in accordance with the time and accessibility requirements of Exchange Act Rule 17a-4(e)(1).

The Commission received no comments on this aspect of the proposed rule change.

The proposed rule change requiring members to keep and preserve a record of its

compliance with the obligations under proposed FINRA Rule 3290 is reasonably designed to

facilitate oversight of a member’s compliance with the proposed rule change. A key component

of regulatory oversight is a member’s retention of its business records. By expressly requiring

compliance with applicable Commission recordkeeping rules, the proposed rule change makes

clear members’ obligation to maintain and make available records related to proposed FINRA

Rule 3290. As such, the proposed rule change will help ensure that regulators can properly

oversee members’ compliance with proposed FINRA Rule 3290. For these reasons, the

proposed rule change is reasonably designed to prevent fraudulent and manipulative acts and

practices, to promote just and equitable principles of trade, and, in general, to protect investors

and the public interest.

General Exemptive Authority

As stated above, proposed FINRA Rule 3290(h) would authorize FINRA staff, for good

cause shown after taking into consideration all relevant factors, to conditionally or

unconditionally grant an exemption pursuant to the FINRA Rule 9600 Series from any provision

of proposed FINRA Rule 3290 to the extent that such exemption is consistent with the purpose

of the rule, the protection of investors, and the public interest. The proposal would also amend

FINRA Rule 9610 to add Rule 3290 to the list of rules for which a member may seek exemptive

relief. The Commission received no comment on this aspect of the proposed rule change.

The proposed rule change authorizing FINRA to grant exemptive relief from any

provision of proposed FINRA Rule 3290 is reasonably designed to allow FINRA members to

avail themselves of an existing procedural vehicle—FINRA’s Rule 9600 Series—to apply for

exemptive relief from any provision of the rule, on a case-by-case basis, to address unanticipated

factual circumstances that may arise under the rule. Prior to granting an exemption, FINRA staff

would be required to consider all relevant factors to determine if good cause is shown for the

exemption, and that the exemption is consistent with the protection of investors and the public

interest. For these reasons, the proposed rule change is reasonably designed to prevent

fraudulent and manipulative acts and practices, to promote just and equitable principles of trade,

and, in general, to protect investors and the public interest.240

IV.

Conclusion

For the reasons set forth above, the Commission finds that the proposed rule change is

consistent with Section 15A(b)(6) of the Exchange Act, which requires, among other things, that

FINRA rules be designed to prevent fraudulent and manipulative acts and practices, promote just

and equitable principles of trade, and, in general, protect investors and the public interest.241

240

A commenter recommended that FINRA establish an effective date for the proposed rule change that is at

least 12 months after Commission approval, in order to provide members sufficient time to update their

compliance systems that are currently designed for FINRA Rules 3270 and 3280. See ASA I at 6; ASA II

at 6-7. In response, FINRA stated that if the proposed rule change is approved it would determine an

effective date balancing sufficient time for implementation with its objective of reducing unnecessary

burdens in a timely manner. See FINRA I at 17; FINRA II at 9. FINRA reasonably declined to establish an

effective date for the proposed rule change at this time.

241

15 U.S.C. 78o-3(b)(6).

IT IS THEREFORE ORDERED pursuant to Section 19(b)(2) of the Exchange Act242 that

the proposed rule change (SR-FINRA-2026-001) be, and hereby is, approved.

For the Commission, by the Division of Trading and Markets, pursuant to delegated

authority.243

Sherry R. Haywood,

Assistant Secretary.

242

15 U.S.C. 78s(b)(2).

243

17 CFR 200.30-3(a)(12).

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