The Financial Industry Regulatory Authority (FINRA) is considering a significant potential change in how it governs certain areas of conflicts of interest by consolidating its rules on Outside Business Activities (OBA) and Private Securities Transactions (PST). This proposal of FINRA Rule 3290 could bring much-needed clarity and efficiency to compliance processes for member firms.
Current Landscape: OBA and PST Rules
At present, OBAs and PSTs are governed separately under FINRA Rules 3270 and 3280. These rules outline how registered representatives must disclose and seek approval for activities and private securities transactions outside their primary roles with their member firms. While these rules aim to safeguard investors and ensure firms maintain proper oversight, their separate governance has sometimes led to confusion, questions over supervisory responsibilities and administrative inefficiencies.
The Proposal: A Unified “Outside Activities Requirements Rule”
FINRA’s proposed Rule 3290 seeks to merge Rules 3270 and 3280 into a single, streamlined “Outside Activities Requirements Rule.” This initiative, which FINRA’s Board of Governors approved for further consideration in late 2024, reflects a broader effort to modernize and simplify the regulatory framework.
The primary goals of this consolidation include:
- Simplified Compliance: By creating a unified rule, FINRA aims to eliminate redundant or overlapping requirements, making compliance more straightforward for firms and registered representatives.
- Enhanced Focus on Risk: The proposed rule is expected to prioritize activities that pose higher risks to investors, aligning regulatory oversight with areas of greatest concern including potential conflicts of interest.
- Increased Clarity: Consolidation will likely provide clearer guidelines for firms and representatives, reducing ambiguity and potential misunderstandings.
Industry Implications
For firms, the consolidation could mean a more manageable compliance process, with reduced administrative burdens and potentially lower costs. Registered representatives may benefit from clearer expectations and streamlined procedures for disclosing outside activities and private securities transactions. However, as with any regulatory change, there will be a transition period. Firms will need to update their policies and procedures to align with the new rule, and training programs may require revisions to ensure compliance. Firms may need to re-evaluate prior approvals of outside activities that involve private securities transactions, particularly firms which have allowed representatives to engage as part of an independent registered investment adviser.
An Important Distinction: Form U4 Reporting Requirements Are Not Changing
As firms begin evaluating the potential impact of proposed Rule 3290, one critical detail deserves attention: the Form U4 reporting requirements remain unchanged. There is currently no proposal to amend the Form U4, which means individuals will still need to disclose whether they are engaged in any other business – whether as a proprietor, partner, officer, director, employee, trustee, agent, or otherwise. The only activities that may be excluded are those that are “exclusively charitable, civic, religious or fraternal, and recognized as tax exempt.”
Consider a practical example. A registered representative who drives for Uber on the side would see that activity classified as non-investment-related under the proposed Rule 3290, meaning it would fall outside the rule’s supervision requirements should it be adopted as proposed. However, because driving for Uber is not charitable, civic, religious or fraternal – and is not tax exempt – it would still need to be reported on Form U4 Item 13 (Other Business).
This is an important distinction for firms to keep in mind. While proposed Rule 3290 may reshape how outside activities are supervised, it does not eliminate the obligation to report them. Firms should be cautious about scaling back their existing OBA/PST programs, as compliance with Form U4 reporting requirements remains firmly in place.
It’s also worth noting that because the Form U4 is a Uniform Form, FINRA cannot unilaterally make changes to it. Any amendments would require coordination with the SEC, other self-regulatory organizations, state jurisdictions, and exchanges that rely on the form – a process that would take time and broad consensus.
Next Steps: SEC Review and Public Comment Period
FINRA has now formally filed its proposed “Outside Activities Requirements Rule” with the U.S. Securities and Exchange Commission (SEC). As part of the SEC’s rulemaking process, the proposal has been published for public comment.
Comments on the latest update must be submitted to the SEC by May 27, 2026. The SEC will also accept rebuttal comments through June 10, 2026. At the recent FINRA conference, it was noted that the SEC must reach a decision on the proposed rule by October 1, 2026.
During this review period, industry participants—including member firms, registered representatives, compliance professionals, and investor advocates—have the opportunity to provide feedback directly to the SEC. The Commission will evaluate submitted comments as it determines whether to approve, disapprove, or institute further proceedings regarding the proposal.
This phase is a critical step in the rulemaking process. Firms should:
- Carefully review the proposed rule text and accompanying economic analysis
- Evaluate potential operational and supervisory impacts
- Consider submitting formal comment letters to the SEC
- Begin assessing how policy, procedure, and technology updates may be required if the rule is approved
While the proposal is not yet final, firms may benefit from early planning—particularly those with complex outside activity approval workflows, hybrid RIAs, or high volumes of private securities transactions.
Timeline of Events
| Date | Event |
|---|---|
| January 22, 2026 | FINRA files SR-FINRA-2026-001 with the SEC |
| February 3, 2026 | SEC publishes Proposal for public comment |
| February 2026 | 2,029 comment letters received (90 individualized, 1,939 form letters) |
| March 13, 2026 | FINRA consents to extension of SEC review deadline to May 4, 2026 |
| May 1, 2026 | FINRA files Partial Amendment No. 1 and Response to Comments |
| Pending | SEC approval; FINRA to set effective date allowing adequate implementation time |
Staying Informed
As this proposal develops, it’s essential for firms and registered representatives to stay informed and engaged. Regularly checking FINRA’s official updates, participating in industry discussions, and preparing for potential changes will help ensure a smooth transition if the consolidation moves forward.
Conclusion
FINRA’s proposed consolidation of the OBA and PST rules into a unified “Outside Activities Requirements Rule” marks a meaningful step toward modernizing regulatory oversight of outside activities and private securities transactions. By streamlining requirements and sharpening the focus on higher-risk activities, the proposal seeks to enhance clarity, improve efficiency, and better align supervision with investor protection objectives.
With the rule now formally filed with the SEC and open for public comment through February 24, 2026, firms have a timely opportunity to assess the proposal’s operational impact and contribute to the regulatory dialogue. Whether through submitting comments or conducting internal readiness assessments, proactive engagement now can position firms for a smoother transition should the rule be approved. For more details, visit FINRA’s official site and stay tuned for updates as this initiative progresses.
Should these proposed rule changes be approved, RegEd’s Conflict of Interest suite is prepared to support you during the transition. Click here to learn more.
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