FINRA Seeks Comments on Proposed Borrowing and Lending to Clients Finance & Banking


United States: FINRA Seeks Comments on Proposed Borrowing and Lending to Clients

To print this article, all you need to do is be registered or log in to

FINRA invites comments on proposed amendments at FINRA Rule 3240 (“Borrowing or Lending to Customers”) to extend the prohibitions against outside borrowing and lending agreements between registrants and their customers.

The proposed amendments (i) would extend the general prohibition under the rule to cover loan agreements that may predate new broker-client relationships and may be entered into six months after the client relationship ends, (ii ) extend the application of the rule to agreements involving a client of the registered individual transacting with a family member of the registered individual and (iii) better define the exceptions to the prohibition.

FINRA specifically asked commenters to address the key points of the proposed changes and suggested the ban could be broadened further.

FINRA invites comments on these proposals by February 14, 2022.


FINRA has generally sought to limit relationships between registered representatives and their clients that are outside the business and supervision of the firm, and that may provide a benefit to the representative. See, for example, FINRA Passes Restrictions on Registered Person Becoming Client Beneficiary or Trustee. These regulatory limitations and prohibitions are particularly important as FINRA and other financial regulators are concerned about any aging client population that may be vulnerable to overreach by their agents.

Primary sources

  1. Proposed Amendments to FINRA Rule 3240 and Retrospective Rules Review Report

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

POPULAR ARTICLES ON: Finance and Banking of the United States

FinCEN Crypto & Ransomware Advice: Will 2022 Bring More Changes?

Torres Law, LLC

The Financial Crimes Enforcement Network (“FinCEN”) of the U.S. Department of the Treasury (“Treasury”) has made it clear that companies engaged in certain activities involving virtual currencies are subject to registration, reporting, record keeping and other anti-money laundering measures (“AML” requirements) under the Bank Secrecy Act and its implementing regulations.


About Author

Comments are closed.