What Is the Taping Rule?
The taping rule requires specific monitoring of FINRA-registered folks with a history and firms that hire such other people in large numbers. Further formally known as Financial Industry Regulatory Authority Rule 3170, “Tape Recording of Registered Folks by way of Positive Corporations,” the so-called “taping rule” is meant to lend a hand meet an common need for better oversight of certain registered representatives with regulatory and compliance knowledge.
It moreover addresses the circumstances and specific oversight needs when an organization hires a large number of disciplined individuals who prior to now worked at an organization that has been expelled or has had its registration revoked and where that they had been inadequately supervised and professional.
Key Takeaways
- The taping rule is a FINRA order to grant additional oversight and surveillance in order to practice firms that hire registered representatives that have had a history of compliance issues.
- The prerequisites for recording will vary depending on the measurement of the disciplined corporate.
- All recordings made could be retained for a period of no longer lower than 3 years from the date that they had been created, the principle two years in an merely out there place.
- Every taping corporate shall catalog the retained tapes by way of registered specific particular person and date.
Figuring out the Taping Rule
The taping rule went into affect Dec. 1, 2014, and was once as soon as adopted into the consolidated FINRA Rulebook converting NASD Rule 3010(b)(2), even though the taping rule provisions went into affect in 1998 when the Securities and Exchange Price (SEC) approved amendments to the NASD rule. In particular, the SEC approved a requirement that folks “determine, implement and care for specific written supervisory procedures, along side the tape recording of conversations, when they’ve hired more than a specified share of registered folks from certain firms that have been expelled or that have had their broker/dealer registrations revoked for violations of product sales practice regulations (‘disciplined firms’).”
Taping Rule Corporate Supervision in Observe
In step with FINRA, the taping rule “calls for an organization to resolve, implement and care for specific written procedures supervising the telemarketing movements of all of its registered folks, along side the tape recording of conversations, if the corporate has hired more than a specified share of registered folks from firms that meet FINRA Rule 3170’s definition of ‘disciplined corporate.'” To have the same opinion firms in complying with FINRA Rule 3170, FINRA provides a “Disciplined Firms List,” working out those firms that meet the definition of “disciplined firm.”
The percentage that is used to get to the bottom of whether or not or no longer the supervisory procedures want to be enacted depends on the scale of the corporate. It ranges from 40% for a small corporate to 20% for a large corporate. The supervisory procedures include recording all the telephone conversations made between registered group of workers and each and every potential and provide customers for three years. As of January 2021, there were six firms which could be recognized by way of FINRA as disciplined firms.
Corporations will have to make sure that they tape document any manner of telecommunication incessantly used by registered folks in talking with customers. This accommodates landlines and mobile phones. If mobile phone taping is not imaginable, the corporate will have to prohibit their use when talking with customers with the exception of their use is warranted for various industry reasons.
