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Outside Business Activity – IS the BD on the hook?

Late last month FINRA withdrew their proposal to require BDs to monitor and supervise an RRs Outside Business Activity (ies). If the proposed amendment to the rule was adopted, a BD would be required to not only be aware of the activity, but also supervise it.  This plan was met with much controversy from the  BD community  BD compliance programs are not structured nor have the resources to implement this requirement.  RRs are still required to notify their BD in advance of any OBA with which they are planning to get involved.  It is up to the BD to approve the OBA.  We have seen BDs and RRs be disciplined by FINRA for not having adequate procedures in place regarding OBAs.  This might be a time to review your current procedures and confirm they are adequate and being properly followed.

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