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Finra Extends Self-Reporting Deadline on 529 Plan Violations

March 11, 2019

Industry organization Finra is giving broker-dealers more time to self-report 529 plan violations and has published guidance on how to assess whether they should self-report and how to do so, according to news reports.

The industry’s self-regulator announced an initiative on regulations governing the tax-advantaged college savings plans in January, urging broker-dealers to review their supervisory systems and self-report violations, as reported.

Broker-dealers who took all the steps required under the initiative would then be able to settle with the regulator with restitution to affected clients and a censure without fines, Finra said. The deadline was originally set for April 1 to self-report violations, and for May 3 to submit requested information, according to ThinkAdvisor.

The regulator has now extended the deadline for firms to submit their self-reports to April 30 and confirm eligibility with additional information to May 31, according to the publication.

The move was prompted by the fact that “people have had a lot of questions about how to engage in the initiative,” Susan Schroeder, head of Finra’s enforcement unit, says in a video message cited by ThinkAdvisor.

In addition, the regulator published an 18-question guidance for firms wondering how to comply with the initiative, according to the publication.

Among the questions addressed was whether member firms needed to review all of the sales of 529 plans and pinpoint unsuitable recommendations, ThinkAdvisor writes.

Finra

Finra says broker-dealers only need to review supervised sales dating back to January 2013 and analyze whether their supervisory procedures required review of sales suitability and obtaining all necessary information to determine it; whether the reviews were indeed conducted; and whether there was training for the firms’ registered representatives, according to the publication.

Finra also said firms that identified potential violations but found their overall supervision was reasonable should nonetheless self-report, ThinkAdvisor writes.

By Alex Padalka
  • To read the ThinkAdvisor article cited in this story, click here.