Articles Posted in Borrowing or lending arrangements

FINRA has recently proposed changes to its Rule 3240, which allows for scenarios where brokers can borrow from or lend to their clients. FINRA’s rule proposal would strengthen and clarify the general prohibition against these types of arrangements and would narrow the exceptions that fall under the prohibition. In its request for comments, the SEC cited Malecki Law’s previous comment addressed to FINRA, dated February 14, 2022 (see Footnote 32 on page 23).

The current comment period closed last week, on February 12, 2024. Malecki Law submitted its public comment on the proposal last week, along with three other organizations. If your broker requests that you lend them money or borrow money from them, you may need to contact a Securities Fraud law firm in New York, like Malecki Law, to analyze whether that arrangement is allowed under FINRA Rule 3240.

This is not the first time FINRA attempted to make Rule 3240 more stringent. FINRA made a similar proposal in December 2021, and that comment period ended on February 14, 2022. Malecki Law also submitted on public comment on that proposal. Click here for the related Malecki Law firm blog post and click here for the related Regulatory Notice 21-43.

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