ICS Insights

Proposed Rule 3290 would reclassify RIA activity as an outside activity, reducing broker-dealer supervision and recordkeeping obligations for hybrid models.

FINRA proposed Rule 3290 (Outside Activities Requirements), which would replace existing Rules 3270 (Outside Business Activities) and 3280 (Private Securities Transactions).

Under proposed Rule 3290:
An associated person’s activity at an SEC- or state-registered RIA would be treated as an outside activity, not a private securities transaction. The associated person would only need to provide prior written notice. Broker-dealers would have upfront assessment obligations, but no ongoing supervision or recordkeeping responsibility for the RIA activity.

Why this matters:
Historically, many independent broker-dealers have applied revenue “haircuts” to hybrid RIAs to offset supervisory and recordkeeping obligations. If Rule 3290 is adopted as proposed, it raises a real question—will those haircuts be revisited or eliminated when supervision is no longer required?

This proposal could meaningfully shift compliance responsibilities and economics for hybrid models. ICS is monitoring this development closely and evaluating its practical impact for broker-dealers and RIAs.

 

This is general information, not legal advice.

 

For more information about the proposed Rule click the following link directly from FINRA: