Supporting Capital Formation: FINRA’s Evolving Regulatory Approach

Capital is the lifeblood of the U.S. economy, funding everything from businesses of all sizes to scientific breakthroughs and infrastructure. With markets moving faster than ever and new products, players, and risks emerging daily, FINRA is modernizing its regulatory framework to keep pace, all while keeping investor protection at the center.

On this episode, Joe Sheirer, Senior Vice President, Corporate Financing, and Gaby Aguero, Vice President, Corporate Financing, explore recent amendments to FINRA rules, expanded IPO access, a recently approved proposal around projected returns in marketing materials, and the data FINRA is publishing to help the entire ecosystem operate more effectively.

Resources mentioned in this episode:

[email protected]

SEC-Approved Rule 2210 Change (Performance Projections)

Reg. Notice 26-14: FINRA Requests Comment on Proposed Changes to Modernize Rule 2210 (Communications with the Public)

Reg. Notice 26-04: FINRA Adopts Amendments to the Capital Acquisition Broker Rules

Rule 5110 (Underwriting Terms and Arrangements)

Rule 5123 (Private Placements of Securities)

Rule 5130 (Restrictions on the Purchase and Sale of Initial Equity Public Offerings)

Rule 5131 (New Issue Allocations and Distributions)

Rule 2310 (Direct Participation Programs)

Quarterly Regulatory Policy Agenda

FINRA Investor Education Foundation

FINRA Forward

FINRA Forward: A Year of Progress

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FULL TRANSCRIPT

00:00 - 01:17
Margherita Beale: Capital is the lifeblood of the U.S. economy. It funds healthcare breakthroughs, major infrastructure, businesses large and small driving growth. With capital markets moving faster than ever, with new products, new players, and new risks emerging daily, regulatory frameworks must keep up. They need to be clear enough to give broker-dealers confidence, flexible enough to permit innovation, and strong enough to protect investors.

On this episode, we explore how FINRA is modernizing its approach to capital formation. We will cover recent rule amendments that reduce friction for member firms, new proposals expanding market access, and the data and information FINRA is publishing to help the entire ecosystem operate more effectively, all while keeping investor protection at the center.

Welcome to FINRA Unscripted. I'm your host, Margherita Beale. Joining us today to talk about capital formation are Joe Sheirer, Senior Vice President of Corporate Financing, and Gaby Aguero, Vice President of Corporate Financing. Joe and Gaby, welcome to the podcast.

01:17 - 01:18
Gaby Aguero: Thank you, Margherita.

01:18 - 01:19
Joe Sheirer: Thanks for having us.

01:19 - 01:35
Margherita Beale: So, to start off our discussion, can you tell us why capital formation matters and what FINRA's role is in it? How central are member firms to how capital actually gets raised in the United States?

01:35 - 04:19
Joe Sheirer: Capital formation is absolutely critical to the functioning of the U.S. economy. What makes the United States the envy of the rest of the world is its capital markets. And broker-dealers and FINRA play a pretty critical role, a vital role, in every aspect of the capital markets. BDs support both issuers and as a result investors in the capital markets by helping to deliver product to the marketplace on behalf of issuers that customers throughout the United States and the world invest in. Broker-dealers help support the liquid markets that make the capital markets work after a product comes to market. And FINRA, through what we think is thoughtful regulation and coordination with other regulators, helps support broker-dealers in their roles in fostering capital raising that helps foster business expansion in the US and abroad, creation of jobs, innovation, and economic growth.

Capital raising as part of the capital formation process comes in a lot of different flavors. You see things like equity offerings, debt offerings, structured products, investment companies, private placements, and broker-dealers are involved in all of these aspects. FINRA member firms are a critical component in each of these in varying ways, but they're really at the heart of raising capital on behalf of issuers at a scale that's really only done in the United States, in large part because of the confidence investors have in our markets because of the role that broker-dealers play, because of the rules and regulations and functions that FINRA performs.

Broker-dealers are involved in due diligence, in sourcing investors, finding financing opportunities for issuers, preparing and delivering research, and all of those are really critical to the capital formation process. And all of those pieces have to work in order for the whole system to work. And broker-dealers again are at the very heart of each of those things, and play a really big part in helping raise small dollar amounts to billions of dollars that we've seen lately for some offerings and across a broad spectrum of businesses. It's not just finance. It's healthcare, it's infrastructure, you name it. Broker-dealers are involved in helping to support capital formation.

And FINRA, throughout the life cycle of the public markets, from inception to an offering and even pre-public offering, we've got involvement in private markets where small companies are trying to finance their business all the way to an active company looking to finance and grow its business, acquire other companies, divest companies. FINRA is there working alongside broker-dealers to help maintain the environment that makes the U.S. capital system so effective.

04:19 - 04:37
Margherita Beale: So, let's start with what FINRA has been doing in this space recently. Can you walk us through the recent amendments to Rules 5110 and 5123? What did they change and why does it matter for members and investors?

04:37 - 07:11
Gaby Aguero: If you just think about what Joe described in terms of our dynamic environment for capital raising, it's always top of mind for us to think about what our member firms need and what all these market participants need. And so I'm going to describe very briefly that the amendments to Rule 5110 again modernize and, I say "again" because this is something that we're constantly engaged in. In these amendments, we simplified and clarified the treatment of underwriting compensation while really maintaining it strong market and investor protection. So those were not weakened at all. And we're thinking about market participants in both the companies that need to raise capital and the investors are coming into these investments once these companies are public.

Specifically, the amendments to Rule 5110 provide a simplified approach to how we value underwriting compensation, plus we added new exclusions. I'm going to spend just a minute or so to tell you about the exclusions because most people really focus on how simplification of valuing compensation is really great, but exclusions are an important recognition of what we don't include as underwriting compensation. And so, we think that's helpful because it allows member firms and issuers to really be in a good position to negotiate prior to initiating a public offering and even during private financings as to what may be included or not included. So it is really important that we had a chance to modernize the rule to simplify it and to add this exclusion, because it adds clarity and hopefully more predictability into our rules.

The other amendments that we have also recently received approval for relate to Rule 5123. Those expand filing exemptions for sales to accredited investors in alignment with the SEC's current definition of accredited investor. That is also an important recognition of how the markets have evolved and how we have evolved as a regulatory oversight for our member firms. We want to ensure that we continue to pay attention to the highest amount of risk where it's really required. As Joe said, we see lots of different types of investors come into this, but we recognize that certain investors need more protection than others, this is when we also have an opportunity to amend the rules.

So both of those amendments and their sets of amendments were really developed in coordination and lots of engagements with our industry. We issued proposed comments in regulatory notices and we did receive feedback. So, we believe these amendments would be well received by our member firms.

07:11 - 07:36
Margherita Beale: So beyond these rule amendments, there have been other meaningful steps that we've taken, including expanded IPO access for collective investment trusts, a modernized public offering filing form, changes supporting capital acquisition brokers, and a new private placement information page on FINRA.org. Can you give us a sense of how those fit into the bigger picture?

07:36 - 11:21
Joe Sheirer: What Gabby just described around 5110 and 5123 rule changes is part of really an overall effort that FINRA's going through called FINRA Forward. And this is just a small piece of that overall effort. It covers the entire organization, and it's really about how do we evolve with the rapidly changing securities industry, how do we modernize our compliance approach, our rules, our guidance, and the support that we provide member firms.

And as initial steps, Gabby had described some rules that we were able to move forward with. And just to put those in context, it's really about providing a framework for broker-dealers to operate within as part of the capital formation raising process that allows them to negotiate and work with issuers who may not be able to afford to pay cash as an example and have to use securities, but we wanted to be able to take a step back and look at those arrangements to make sure that it's fair and equitable for the investors or the issuers that are on the other side of those transactions.

So we're constantly looking at how the industry is changing its business practices. Whether that's because issuers need different types of financing or there's different compensation arrangements between issuers and broker-dealers. We want to make sure that those are equitable for investors and issuers. They're disclosed, that they're when there's conflicts, they're managed and/or disclosed or mitigated. So this is again part of that big FINRA Forward initiative to really look at how the industry continues to evolve constantly, rapidly sometimes, new product offerings.

And so we've done a few things beyond the [Rules] 5110 and 5123 changes that Gaby mentioned. That includes things like looking at our Rule 5130 and 5131, which is around initial offerings and who can participate and how offerings are allocated. So, we, as an example, identified that business development corporations, if they were publicly traded, were exempted from those particular rules, but if they were private, non-traded, they were not exempted. And when the rules were initially in place, that probably made sense because the private space was a much smaller fraction of the business development corporation offering space, but that's changed a lot over the last few years. Collective trust funds or collective investment trusts have also become more involved in the market. So, adapting the rules as the markets change, as long as we support and maintain investor protection, is really the driving force for these changes.

Margherita, you mentioned CABs. We made some changes in the capital acquisition broker (CAB) space to recognize that that regulatory regime, which is really focused on brokers interacting in a limited capacity with a limited type of customer, has evolved also. And so, we've adapted some of those rules to allow for more involvement by those broker-dealers to support capital formation, but again, not at the risk of investor protection issues. We've tried to issue some frequently asked questions to clarify how rules work for the membership. Things like, clarifying when discretion doesn't need to be supported by written authorization when selling a direct participation program, or clarifying that limited liability companies are able to be considered for tax flow-through purposes under our Rule 2310.

And, as you mentioned, private placement information. FINRA has this unique segment of the market that we have a view of where broker-dealers are facilitating private securities sold to retail investors. We received private placement filings about 2,900 annually, and we saw an opportunity to provide information about that segment of the market to member firms, to the public, to other regulators who were interested. So, we've started disseminating that information. Again, with that mindset as part of FINRA Forward of how can we support compliance, enhance what we do for the industry. And these are all small steps in a much bigger pie that FINRA's working on across the entire organization.

11:21 - 11:29
Margherita Beale: So, from your perspective in corporate financing, what are you actually seeing in the markets right now?

11:29 - 14:12
Gaby Aguero: By "market" it's worthwhile to clarify that our market here means really a subset of filings. We have a representative small fragment of all the filings that are made with the SEC and offered widely. For example, not every offering, whether it's a public offering or private placement, will engage a member firm to facilitate capital. So that explains why we have a fragment of that market.

It's actually a pretty interesting development in the market because as Joe is referring to 2,900 filings, this year we are on pace to be about the same volume of private placements as last year, as well as public offerings. During the second half of this year for reasons outside of FINRA's control, in the market, we are seeing a decline in the number of public offerings, although as we just talked about here, we're seeing some very large offerings. So, there may be a skew there with amount of capital raised and the number of offerings. But it does seem to be tapering off in terms of volume.

We continue to see capital raising from issuers that have very innovative business plans, as we've all read through the press and in the market, we see plenty of companies that are doing technology-based solutions, not just what we're normally referring to now as AI, but all sorts of technology companies. And this is where we see innovation and we see lots of new companies and operating companies and companies from different venues coming to our market to really either raise capital from the public markets or the private markets.

So, it is pretty interesting and it is always changing and developing as markets evolve and interests vary also from investors and market participants as well. Innovation is a constant in this space. We see pretty unique and novel products as well, not just in the types of companies, but also in the types of products that are being offered. And this year has not been different than that. In fact, we're seeing some structured products that are pretty innovative, including predictive markets and including other types of securities, including crypto assets. And so, we are evolving too as we are considering what types of regulatory oversights or concerns do we have in those.

But one thing I want to emphasize here, we want to work very closely with our member firms. Corporate financing looks at public offerings and private placements either before they go to market or as they go to market in the case of private placement. So, we want to invite our member firms to really reach out to us when they have questions or if they have novel products, novel distributions, or just what they may feel is an impediment, because we'll gladly work with them. We have very talented folks here who are eager to also have those conversations, And we'll work to the best that we can to help our member firms as much as we can before these offerings go to market.

14:12 - 14:19
Margherita Beale: How does what you're seeing, what does that tell us about where the capital markets are heading?

14:19 - 16:15
Gaby Aguero: It can tell us different messages in terms of how live and how dynamic the market is. It also sometimes tells us how challenging the environment is. And we see lots of different changes. It's not complex, but it is dynamic. We may have an offering that may be expecting to go public, for example, next month and may very, on a very-short term basis, postpone the offering. And so, we work closely with our member firms and sometimes our counsel to work on if there are financings that are added in in terms of a private placement, or if they do alternative forms of financing, how can we help and facilitate that for our member firms? It's something that we're constantly engaged with.

We do work closely with all the stakeholders to try to align our review and our concerns and be in alignment with all the participants so that we don't become an impediment. In fact, we want to be as closely aligned with the SEC as possible. Many of the SEC CorpFin staff also review public offerings. In the case of private placements, we will also reach out if we have questions to our member firms, and we try to do that also very timely and as best as we can to not concern them but also get information if needed.

I want to share with you that we are launching a new email box, because we really want to invite our member firms and others to really send us questions. So that email box, I'm going to mention it a couple of times, but it is [email protected]. And this is a mechanism how we can engage, how we can sort of come in and be helpful. We're happy to hear about what they think may be a problem. We'll hopefully have a dialogue or maybe options in terms of a solution. Ultimately, we do defer to our member firms to decide which regulatory options they want to opt in, because every firm is unique in that, but I just want to mention that because we are happy to engage with our member firms.

16:15 - 16:44
Margherita Beale: Great. And we'll include all of the resources and this new inbox in the description for the episode as well for easy access. So, you have both touched on this a few times, but can you talk a bit about investor protection? How have we ensured that these changes and these developments are strengthening protections rather than weakening them?

16:44 - 17:13
Gaby Aguero: FINRA has not changed its mission. We will engage and work with our member firms of all types and all sizes and all types of capital raising, but we have not changed our mission in the we will be continuously focused on investor protection, while we continue to work with our member firms to anticipate and work with them to give them options. This is what keeps our market safe and attractive for all of these companies that come and list here, or raise capital from private investors. So that has not wavered.

17:13 -
Joe Sheirer: Gabby's mentioned and I've mentioned a lot about the engagement with the industry as part of our process to stay abreast of what's happening and working to evolve. But we get a lot of feedback and suggestions. It's not just, "Thanks for the input, we'll go do that." There is a very thoughtful and detailed process that goes into issuing guidance or making rule proposal changes. And part of that is very much the engagement with the industry.

What are the things that are creating challenges? And we're really looking over these last 18 months or so at what the things that are creating frictions but aren't producing regulatory outcomes or aren't really impacting investor protection? And so we're evaluating that in the context of all these questions and suggestions. But there's a lot that we leave on the cutting room floor, so to speak. So, for every rule proposal that we come out with or guidance that we're issuing, there's probably at least three, if not five, other suggestions that we're leaving on the cutting room floor and saying, "Those are things we're not comfortable moving forward with because they might create investor risk, or we believe that it will create investor risk." And those are discussions that we have with commenters, with the industry as part of our Corporate Financing Committee, to have discussions about, "If we were to do this, what's the real-world ramification?"

So, we don't do this in a vacuum. We don't move forward with everything. We're always looking at what is the impact to investors potentially of making these changes and move forward with those that we feel reduce friction in the process, but don't create harm and don't create risk.

18:44 - 19:33
Gaby Aguero: We work with many, many, many people internally and externally. We have economists, we have lawyers, we have people that do this work in corporate financing, even other groups outside of corporate financing who really participate in that discussion to really ensure that we are thinking from different perspectives, different areas. It's really a very careful and thoughtful and comprehensive process because we are trying to achieve the best result for all market participants. So sometimes we may ask, "When, when and how is it coming?"

But I just want to assure everybody it is very, very careful, and we do nowadays use our data to also inform us. So, we look back at what's happened, what risks do we have that we want to continue to ensure that we can mitigate with these rules. And that data has been really informing our work and will continue to do so.

19:33 - 19:52
Margherita Beale: Great. Thank you both. Beyond the rules already adopted, there are other developments in motion, including around how marketing materials can communicate projected returns. Can you explain what's been proposed, what's at stake, and why it matters for member firms raising capital?

19:52 - 22:27
Joe Sheirer: Absolutely. We have a proposal on a rule change for modifying our Rule 2210, which deals with communications with the public, that would, subject to specified conditions in the proposal, allow firms to include projections of performance and targeted returns in written communications. Exciting news on the projections proposal is that the SEC recently approved it. Obviously, there's some work for us to do to make it effective, chief among those is the issuance of a regulatory notice that identifies the effective date. So don't just start using projections right away now that you've heard the proposal is approved. Give us a bit of time to issue that reg notice, and we'll move forward with using that new feature of the rule soon.

What's at stake and why does it matter is really at the core of the question. The reality is that brokers and customers are interested in how products are likely to perform or projected to perform or what the targeted returns are and the ability to do that reliably and reasonably varies from industry to industry. But when you think about things, for example, like real estate investments, there is a pretty standardized way across the industry to evaluate how a particular investment might perform. It doesn't mean it's going to, but there's structures and existing practices that are used for brokers and customers to talk about these things and in some cases include them in offering materials. But, at present, you're not allowed to include them in written communications. And what the rule would allow is to include that information in written communications.

And for me anyway, as an investor, I think about, "[It's] great that you're telling me this, but show it to me in writing." I think that to me this adds value. From a practical standpoint, I'd rather be able to see what you're telling me, not just hear what you're telling me. And marketing is an important part of how customers learn about products. So allowing firms to do this, subject to an environment that they would be responsible for maintaining procedurally, making sure that the projections and performance have a basis that's reasonable, that it's communicated to an intended audience that fits with the product that they're projecting performance on and it's aligned with the customer's investment objectives or financial situation. Those are the conditions that are part of this proposal, and we think it just makes sense.

Beyond the fact that we also see this split within the financial services industry, broker-dealers live within the same world that investment advisors live in. Investment advisors can communicate this way, but broker-dealers can't. So, we saw an opportunity for alignment, especially in a community like member firms that are FINRA members, sometimes are also investment advisors. So how do you figure out what you can promote and include in a written communication if you're subject to two different regulatory regimes? So, we saw this as a step in the direction of alignment from the broker-dealer and investment advisor space. But ultimately, it's about being able to project performance and target returns based on reasonable basis and appropriate assumptions that the firm can document and provide information to customers in writing that they're most likely already discussing anyway.

22:52 - 23:07
Margherita Beale: More broadly, there are other developments in the regulatory landscape that could intersect with capital formation, including around registered offering reform and crypto assets. How is FINRA thinking about those as they evolve?

23:07 - 24:41
Joe Sheirer: There's a lot going on in the capital formation space. FINRA's obviously active. The SEC's got a number of proposals, as you mentioned, Margherita. There's also recent proposals around expanded accredited investor definitions and evolution, potentially, of certain investment company rules. The short answer is we're monitoring all of these things and engaging with the SEC and engaging internally, not just within Corporate Financing, but also other departments.

Taking crypto as an example, FINRA's been very active in the crypto space, trying to make sure we're understanding what products are coming to market, how they operate, the underlying operations like tokenization and ledgers, how do they work? So, it's a really holistic view of these proposals, trying to stay on top of how they're progressing, how they might be evolving and what changes might we need to make in our rules, in our guidance, in our examinations program, or investigation program, our monitoring programs.

So, it's a company-wide effort to evaluate the impact of these things. And it's not just one and done. The proposal comes out, we evaluate it. We hope but that it stays the same and incorporate changes later. But it's an ongoing, kind of like the capital markets' constant evolution, as a proposal comes out, assessment, plan, reassess as things change, and then initiate changes again. It might be rule changes to the capital formation space. It might be looking at supervision rules or communication to the public rules, but it depends very much on the particular proposals, and what departments, rules and firms might be impacted by those proposals.

24:41 - 24:58
Margherita Beale: So Gaby, you talked a bit about this earlier, but FINRA occupies a unique position when it comes to data on private placements and IPO activity. Can you talk about that and why it matters for members, for investors, and for the broader ecosystem?

24:59 - 26:47
Gaby Aguero: FINRA has a unique opportunity to use its regulatory intelligence to provide our member firms with information that supports their successful operations and planning while maintaining the common focus on investor protection. We began sharing anonymized and aggregate data on private placement, as you know. And we have received positive feedback so far. We are exploring additional data.

To give you a sense and to also give you an update on the data that we previously published, this year alone, we are seeing, for example, that we're continuing to see 85% or so of private placements include equity, while the remaining is debt and other products. So that's an interesting makeup, and it is helpful, we believe, to our member firms and to investors and other market participants to understand what FINRA is seeing in terms of that regulatory intelligence.

We are actively considering what other data we can publish that may be helpful, informative, and help member firms and others plan forward, continuing with the changes in the environment and the dynamic nature of this business. There's other data available actually to member firms through report cards. And those are hugely, we think, informative and valuable in terms of their compliance programs. There are three separate report cards that are accessible to member firms through Gateway, and they will include data on filings that have been sent to us. And so, it's important because they can tell what we have in terms of their activity or their offerings here. And they can certainly reach out to us and ask questions or develop farther engagement into that data or what we're seeing in terms of the report cards. We do believe this information is highly valuable. And so, we're looking into additional regulatory intelligence to see what else could we publish from that.

26:48 - 27:34
Joe Sheirer: On the data front, I just wanted to take a moment to say we are not the exclusive source of a lot of data. Just wanted to plug [that] the SEC also has a lot of good data that's publicly available in the offering space. And Gabby had mentioned earlier that some of what we see at FINRA is just a segment of the markets for various reasons, private placements as an example. Filings by FINRA member firms only represents maybe about 10% of the overall private placement market. In the corporate and public offering space, there's exemptions that we have. So, we don't always have all of the data to provide, but we do about our own filings. The SEC has a much broader view and they publish things quarterly in the offering space that, if you're interested in the landscape, I would highly recommend. I find it informative. They also have reports about small business capital formation that are very insightful to trends and evolving issues in that space.

27:34 - 28:12
Gaby Aguero: We also at FINRA publish other reports, whether it be from the Investor Foundation or in the industry report and other data. So, we have increasingly been sharing data to really describe what we're seeing in our space. So, it may not be a publication from corporate financing, you might see it as a FINRA publication, but we are increasingly sharing our data where we think it's helpful and relevant to that publication. So please also be on the lookout for that because we are making more and more data available so long as we don't compromise certainly the confidentiality that we owe to our member firms on the regulatory information and data that we receive from them.

28:12 - 28:21
Margherita Beale: Great. So, as we start to wrap up today, what can you signal about where things are heading next in this space?

28:21 - 30:38
Joe Sheirer: Yeah, it's hard to be specific because the world changes very quickly, as we've mentioned a number of times during this conversation, it's a rapidly evolving marketplace, it's a rapidly evolving product landscape. So that's the core of what's next, is continuing to monitor how the industry changes, what products change, adjusting our rules and guidance in a way that's appropriate for the circumstances without compromising investor protection.

And that comes through many sources, whether it's CorpFin engaging with our committees or the work that we do on a day-to-day basis or other work that FINRA is doing across the broad spectrum of regulatory operations and learning from that, and then having an ongoing dialogue is going to be certainly part of what's next and always will be part of what's next. So that we engage with the industry as well as, and I don't mean just member firms, this is a broader industry. It's other regulators, it's the legal community, it's investors, it's small businesses. We engage with all of these folks through different forums. So that will certainly be part of what's next. And as we learn from that, looking at how we enhance our systems, how do we modify the information that we provide to the industry?

Gaby mentioned the private placement data. How can we expand on that? What information can we provide about public filings that we haven't yet today? So we're exploring those things and thinking about continuing to expand on what we do in that space. So more to come in that in terms of details as we get there, hopefully in the next few months. And of course, we're going to have to continue to monitor the roof proposals, whether that's the SEC's, states have some lanes here to work in, so we have to monitor what's going on at the state level and also federally. Congress is very much interested in the capital formation space, so staying on top of that, working with other folks to implement changes as we need to.

And that's all really part of in some way, shape or form, policy work that I think is important to call out the Quarterly Regulatory Policy Agenda that FINRA started a few quarters ago. That policy agenda, which does get updated quarterly, outlines current priorities, active filings, and other significant regulatory efforts. I would highly encourage any of the regulatory nerds out there who are like me interested in what's going on to keep an eye on that and check up every quarter with what's changed. And that regulatory agenda highlights a lot of the details at a more significant level than what I'm talking about here, about what we're thinking about moving forward with.

30:38 - 31:37
Gaby Aguero: I also want share that we are committed and really working around the clock to modernize our systems within Corporate Financing. So, our member firms and others will continue to see changes because we want to simplify and reduce the amount of time that is required and the amount of effort that's required to submit filings, certainly bring value to some of those filings back to them in terms of either time or savings. So, we have a significant amount of effort placed around that.

We are here to engage with our member firms and with others, particularly when they believe that they have a problem, we want to hear about that either the sooner the better, but certainly we can also engage in review. So that is something that we're continuing to focus in, to see how can we support, how can we assist with compliance questions, how can we help with product changes or changes because the market is changed and now we need a change, and we want to engage with FINRA, so we're here for that.

31:37 - 31:44
Margherita Beale: Final question for both of you. What is the most important takeaway you would want listeners to leave with from this conversation?

31:44 - 32:32
Gaby Aguero: Part of what's kept me here at FINRA for so long is that we really enjoy learning and understanding our member firms. And so, the better and the more engagement we have with our industry, the more we can learn and evolve together. So, I really want to invite our member firms or audience here to really engage with us.

I'm going to plug in again and say that we have launched a new email. It is [email protected]. We will accept any requests or emails, feedback, comments, suggestions, interpretive guidance. You know, I know this is a little scary, but we don't want to be a scary regulator. We want to be a proactive regulator that partners with our member firms. So that's the biggest takeaway. Please engage with us so that we can understand what needs there are so that we can evolve together.

32:32 - 33:25
Joe Sheirer: Yeah, and I'll just hit on a theme that I know we've mentioned a couple of times, so I feel a bit like a broken record, but markets and products evolve and they often do so quickly. Gaby mentioned learning. I'll just hit on that point from a different angle. It's important that we the regulators, we the member firms, we the investing public, stay educated and understand what we're selling, we're buying. What are the features? What are the benefits? What are the risks? What are the conflicts? How is compensation work? Don't be afraid to ask questions. Make sure you have that strong understanding before making a pitch or before making a purchase. And that I think goes a long way for everybody in the industry, both the buy side, and the sell side, if you will. But keeping the markets great and functioning the way that we know they can.

33:25 - 33:50
Margherita Beale: Fantastic. Well, thank you so much to the both of you for joining us today. That's it for today's podcast. Listeners, if you don't already, please be sure to subscribe to FINRA Unscripted wherever you listen to podcasts. All of the resources mentioned in today's episode will be included on the homepage for the podcast episode. Today's episode was produced by me, Margherita Beale, and engineered by John Williams. Until next time.

33:50 - 34:29
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