FINRA Rule 4530(a) requires
member firms to promptly report certain enumerated events. Rule
4530(b) is less specific, with supplemental guidance advising that
a firm should report when it concludes or reasonably should have
concluded that conduct or events will result in "widespread or
potential widespread impact to the member, its customers or the
markets," or ensue from a "material failure of the
firm's systems, policies or practices involving numerous
customers, multiple errors or significant dollar amounts."
But which events or conduct
should a member firm consider self-reporting under 4530(b)? Little
guidance is available to firms, which could expose themselves to a
regulatory investigation or an enforcement action by making
non-mandatory disclosure. Nevertheless, a firm may benefit from
self-reporting certain misconduct, regardless of whether the rule
really requires such disclosure.
