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The Financial Industry Regulatory Authority has released frequently asked questions guidance on Rule 4111 (Restricted Firm Obligations), which sets extra requirements for broker-dealers with a significant history of misconduct, including firms with a high concentration of high-risk brokers.
Restricted firms may be required to deposit cash into a segregated account to cover potential future regulatory fines. FINRA said in early February that on June 1, it will start the process to determine which of the 3,400 broker-dealer firms under its purview meet the “preliminary criteria” to be categorized as a restricted firm under new Rule 4111.
