New Regulatory Rule/Policy

New Regulatory Rule/Policy

New Regulatory Rule/Policy
09 Dec 2013 In Blog No Comments

Effective June 1, 2014 NFA began imposing a fee of $1,000 when a firm or individual fails to disclose a disciplinary matter on a registration application or fails to promptly update an existing registration record to disclose a new disciplinary matter in accordance with NFA Registration Rule 210(c). When the new policy was rolled out, NFA stated that it institute a policy of not taking adverse registration actions when the failure to disclose is the result of negligence or carelessness.

The late disclosure fee will be imposed irrespective of whether or not NFA initiates an adverse registration action based on the failure to disclose or the underlying matter. With respect to disclosure of new matters, the NFA Member firm is responsible for promptly reporting not only matters that relate to the firm but also matters related to its APs and principals, who must advise their sponsor of any new matters. Generally, NFA considers a matter to have been promptly disclosed if the firm, whether for itself or its APs and principals, discloses the matter before NFA discovers the matter and requests disclosure of it.

Additionally, in the case of an AP’s or principal’s non-disclosure, the individual’s sponsor, as part of its supervisory obligations, is responsible for performing sufficient due diligence to reasonably ensure that all matters requiring disclosure are in fact disclosed. Consequently, the rule provides that the sponsor is responsible for payment of the late disclosure fee to NFA when a principal or AP fails to disclose a matter. However, the rule does not prohibit the sponsor from requiring the individual to reimburse it for the late filing fee. Finally, when an individual is sponsored as an AP by or is a principal of multiple entities, each sponsor bears equal responsibility to perform the necessary due diligence, and each sponsor will be assessed the late filing fee.

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