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FINRA Rule 4160

Provides that a member, when notified by FINRA, may not continue to custody or retain record ownership of assets at a non-member financial institution if the financial institution fails to provide FINRA with written verification of the member's assets.

Rule Overview

Jurisdiction: United States

Regulator: FINRA

Topic: Custody, Disclosure

FINRA Rule 4160
Overview
Latest News
Further Reading

Restrictions on Maintaining Assets

If FINRA notifies a member firm that a non-FINRA financial institution has failed to timely provide requested written verification of the firm’s assets, the firm may not continue to:

  • Custody those assets.
  • Maintain record ownership of those assets.

This applies to both:

  • Customer assets.
  • Firm (proprietary) assets.

If assets must be moved as a result of this rule, the firm must transfer the impacted assets within a reasonable period of time.

Exceptions

The rule does not apply to:

  • Proprietary assets that are treated as non-allowable assets under SEC Rule 15c3-1.
  • Situations where FINRA determines there is no independent custody or record ownership of the assets.

SEC Customer Protection Requirements

This rule does not alter a firm’s obligations under SEC Rule 15c3-3.

Latest News

More on Recordkeeping
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Further Reading

Regulatory Notice 10-61, SEC Approves New FINRA Rule 4160 Relating to the Verification of Assets at a Non-Member Financial Institution Go to https://www.finra.org/rules-guidance/notices/10-61