The New FINRA Proposal: Combining FINRA Rule 3280 and 3270

On March 14, 2025, the Financial Industry Regulatory Authority (FINRA) proposed a new rule which would consolidate existing FINRA Rule 3280 and FINRA Rule 3270.  

In this blog, we’ll deep-dive into some of the key excerpts from the proposal, highlighting the impact it may have on the industry should it be adopted.  

Key Takeaways: FINRA’s Proposal to Combine FINRA Rule 3280 and 3270 Intro One Streamlined Rule 

Currently, FINRA Rule 3280 and 3270 cover specific areas associated persons’ outside activities: 

FINRA Rule 3270 

“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. Passive investments and activities subject to the requirements of Rule 3280 shall be exempted from this requirement.” 

FINRA Rule 3280 

“No person associated with a member shall participate in any manner in a private securities transaction except in accordance with the requirements of this Rule.” 

So, how is the new Proposal different? And what should firms be aware of? 

In their Notice, FINRA highlights that it, “addresses the non-securities business activities and securities transactions that are outside the regular scope of individuals’ employment with a member, but importantly the Proposal narrows the focus to investment-related activities to reduce unnecessary burdens while maintaining the core investor protections of the existing rules. The Proposal also provides clarifications or exclusions for some activities…” 

Additional key highlights from the Notice include: 

• Investment-Related Activities: The Proposal focuses on outside investment-related activities that may pose a greater risk to the investing public and members. 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… 

• Registered and Associated Persons’ Prior Written Notice Obligations: The Proposal maintains existing requirements regarding prior written notice. As is required today, under the Proposal, a registered person who intends to participate in an outside activity and an associated person (including a registered person) who intends to participate in an outside securities transaction must provide prior written notice to the member. 

• Members’ Responsibilities Upon Receiving Notice 

• Clarifications: The Proposal clarifies members’ obligations in several areas 

• Outside IA Activity: …through a series of Notices to Members issued in the 1990s, FINRA applies PST requirements to outside IA activities.8 This guidance would remain in effect under the Proposal. 

Exlusions under the new Proposal include: 

• the Proposal excludes an associated person’s (including a registered person’s) non-BD activity on behalf of a member or its affiliate (e.g., IA activity at a dually registered firm and IA, insurance or banking activity conducted at an affiliate). 

• the Proposal excludes outside securities transactions among immediate family members for which there is no selling compensation 

• the Proposal excludes outside securities transactions subject to Rule 3210 (e.g., securities in an account held at another member) and transactions delineated in Rule 3210.03 

• the Proposal excludes personal investments in non-securities and the purchase, sale, rental or lease of a main home or dwelling unit or personal-use rental property, as defined for purposes of the Internal Revenue Code 

Comments are due by May 13, 2025.   

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