ADISA submitted comment to FINRA regarding Regulatory Notice 25-05: Outside Activities, which is FINRA’s proposal to adopt a new rule to govern the outside activities of member firms’ associated persons.

ADISA is focused on the Notice’s request for input on the obligations of member firms to supervise and keep records for so-called “Outside IA” activities of it registered persons who are associated with unaffiliated investment advisers (“IAs”). In summary, ADISA does not believe that significant benefits can and will be achieved by requiring that such activities be supervised by member firms, particularly in light of the burdens that such an obligation places on member firms.

FINRA requested comment on the following, which ADISA addressed:

• What are the alternative approaches, other than the Proposal, that FINRA should consider?
• What are the challenges members face regarding supervising and recordkeeping outside IA activities for selling compensation? Would the removal of the requirement for FINRA member oversight of outside IA activities by their associated persons impact investor protection considering that IAs are regulated by either the SEC or the States? What are the benefits of BD supervision and recordkeeping of outside IA activities for selling compensation?

The letter was drafted by ADISA’s Legislative & Regulatory Co-Chairs Deborah Froling, Kutak Rock, and Catherine Bowman, The Bowman Law Firm. It was signed by ADISA President John Grady, ABR Dynamic Funds.

Read the letter in its entirety here.