The Financial Industry Regulatory Authority’s plan to relax its rules on brokers’ outside business activities has earned the approval of the Securities and Exchange Commission, AdvisorHub reported.
The SEC disclosed its decision in a 72-page order, following the proposed rules changes that were submitted by FINRA in January 2026.
The proposal would adopt FINRA Rule 3290 (Outside Activities Requirements) and delete existing FINRA Rules 3270 (Outside Business Activities of Registered Persons) and 3280 (Private Securities Transactions of an Associated Person).
The intent is to streamline and reduce unnecessary compliance burdens regarding requirements that address the outside activities of member firms’ associated persons, specifically low-risk and non-investment-related activities.
Currently FINRA Rule 3270 states, “No registered person may be an employee, independent contractor, sole proprietor, officer, director or partner of another person, or be compensated, or have the reasonable expectation of compensation, from any other person as a result of any business activity outside the scope of the relationship with his or her member firm, unless he or she has provided prior written notice to the member, in such form as specified by the member.”
But with more brokers taking on outside work, or ‘side hustles’, FINRA has seen the need for a rule revision in which outside investment-related activities would not be monitored as strictly as before. The proposal would eliminate the reporting and assessment of low-risk side work that does not impact customers.
The proposal would replace two rules—Rules 3270 and 3280—with Rule 3290, which would amend the requirements to focus on outside activities that potentially present heightened risks for members and the public. FINRA said of the consolidated new rule, “This will both increase investor protection and decrease burdens on members by eliminating the reporting and assessment of low-risk activities that create white noise.”
The change would eliminate the reporting and assessment of activities such as brokers refereeing sports games, driving for a car service or bartending on weekends. Brokers would be allowed to proceed with those activities without acquiring their firms’ approvals, including a securities transaction, if no compensation is at stake. Among the activities excluded from reporting requirements are personal real estate transactions such as rentals and sales of homes.
As a result, FINRA said, firms would be able focus on more substantive potential conflicts that could include brokers selling away potentially risky products such as crypto assets, fixed annuities, commodities or private placements. Brokers are still required to provide prior written notice before engaging in those outside activities The new rule also clarifies that broker-dealers are not obligated to supervise a dually registered individual’s unaffiliated registered investment advisory firm.
In approving the plan, the SEC stated, “[T]he proposed rule change would eliminate the burdens associated with the reporting and assessment of activities that FINRA views as having lower risk (such as refereeing sports games and bartending), allowing members to dedicate resources to activities presenting higher risk to investors.”
Under the FINRA rule, brokerages would be required to determine whether brokers’ outside activity or outside securities transaction “will interfere with or otherwise compromise” their responsibilities to customers, the SEC said. Firms are obligated by the new rules to “evaluate the risk of the proposed activity to the member and the member’s customers” the SEC said.
“The obligations imposed by the proposed rule change are a floor, not a ceiling,” the SEC said, noting that firms may conduct broader assessments or impose stricter requirements.
The SEC added that firms can focus on areas where the “associated reputational and legal risks to the member are greatest.”.
FINRA will set the date that the new rule takes effect
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