FINRA Rule 3110, supervision

FINRA Rule 3110

In force since 1 Dec 2014.

An AI sector rules rule binding private bodies.

Enforcement body: Financial Industry Regulatory Authority (FINRA)
Instrument type: a regulation made under an act
Obligation class: Governance, Retention
Audit expectation: periodic
Who audits it: Internal independent
Where the report goes: Kept

As of 10 October 2026.

What it requires

It reaches you if you are a FINRA member firm or a person associated with one, because FINRA may sanction either for a violation of a FINRA rule (Rule 8310(a)): establish and maintain a system to supervise the activities of each associated person that is reasonably designed to achieve compliance with applicable securities laws and regulations and with applicable FINRA rules; final responsibility for proper supervision rests with the member (Rule 3110(a)).
Establish, maintain, and enforce written procedures to supervise the types of business in which you engage and the activities of your associated persons, reasonably designed to achieve compliance with applicable securities laws and regulations and with applicable FINRA rules (Rule 3110(b)(1)).
Include in those procedures a review of incoming and outgoing written (including electronic) correspondence and internal communications relating to your investment banking or securities business, appropriate for your business, size, structure, and customers; a registered principal must conduct the review and evidence it in writing, and merely opening a communication is not sufficient review (Rule 3110(b)(4) and Supplementary Material .07).
Have a registered principal review all transactions relating to your investment banking or securities business, evidenced in writing; a reasonably designed risk-based review system may be used in place of a detailed review of each transaction (Rule 3110(b)(2) and Supplementary Material .05).
Retain the internal communications and correspondence of associated persons relating to your investment banking or securities business for the period and with the accessibility SEA Rule 17a-4(b) specifies, keeping the names of the persons who prepared and who reviewed outgoing correspondence ascertainable from the retained records (Supplementary Material .09).
Promptly amend your written supervisory procedures to reflect changes in applicable securities laws or regulations, including FINRA rules, and as changes occur in your supervisory system, and promptly communicate the procedures and amendments to the associated persons they concern (Rule 3110(b)(7)).
Review the businesses in which you engage at least annually (on a calendar-year basis), inspect every office of supervisory jurisdiction annually, and reduce each inspection to a written report kept on file for a minimum of three years (or, for a non-branch location inspected less often than every three years, until the next inspection report is written) (Rule 3110(c)(1) and (c)(2)).

What this law does

Drafted with AI

Drafted with AI from the cited sources under the direction of UnGovr staff. UnGovr holds editorial responsibility for this page. How this site is made

Research summary

Legal information, not legal advice. This is LexLint's own research summary of a public legal source, and it creates no attorney-client relationship. For decisions that matter, consult qualified counsel in the relevant jurisdiction. About LexLint

FINRA Rule 3110 requires each member to establish and maintain a system to supervise the activities of each associated person that is reasonably designed to achieve compliance with applicable securities laws and regulations and with applicable FINRA rules. Each member must also establish, maintain, and enforce written procedures to supervise the types of business in which it engages and the activities of its associated persons.

Those procedures must include procedures for the review of incoming and outgoing written (including electronic) correspondence and internal communications relating to the member's investment banking or securities business, appropriate for the member's business, size, structure, and customers. A registered principal must conduct the review of correspondence and internal communications and evidence it in writing, either electronically or on paper.

Merely opening a communication is not sufficient review. A supervisor or principal may delegate certain review functions to persons who need not be registered but remains ultimately responsible for the performance of all necessary supervisory reviews. Each member must retain the internal communications and correspondence of associated persons relating to its investment banking or securities business for the period of time and accessibility specified in SEA Rule 17a-4(b).

Each member must conduct a review, at least annually on a calendar-year basis, of the businesses in which it engages. The Commission approved FINRA's new consolidated rules governing supervision, of which Rule 3110 is one. The new supervision rules became effective on December 1, 2014.

Section 78o-3 of title 15 requires the rules of a national securities association to provide that its members and persons associated with its members shall be appropriately disciplined for violation of the rules of the association. FINRA may impose sanctions on a member or person associated with a member for each violation of FINRA rules, from censure and a fine to expulsion and a bar from association with all members.

Guidance on this law

How the bodies that enforce this law read it. Guidance binds nobody by itself, so LexLint never raises a finding from it; the duty is this law's.

FINRA Regulatory Notice 24-09, FINRA reminds members of regulatory obligations when using generative artificial intelligence and large language models, FINRA

When LexLint raises it

When your app profile says your app provides financial services.

Back to the example · Lint your app