On Friday, March 14, in Regulatory Notice 25-05, the Financial Industry Regulatory Authority (FINRA) proposed a new rule to address when registered individuals engage in activities away from their member firms and when associated persons (which can be registered or unregistered individuals) engage in securities transactions away from their member firms. If adopted, new FINRA Rule 3290 would replace existing FINRA Rule 3270 (covering what was known as “Outside Business Activities” or “OBAs” and under the proposed rule will be known as “outside activities”) and FINRA Rule 3280 (covering what was known as “Private Securities Transactions” or “PSTs” and under the proposed rule will be known as “outside securities transactions”). FINRA previously proposed similar changes in 2018, but that proposal did not move forward, given concerns over the prior proposal’s treatment of investment advisor activities conducted away from the employing member firm. The current proposal, therefore, provides little change from the current rules on outside activities and transactions at unaffiliated investment advisers. It does, however, simplify and streamline the OBA and PST compliance process by:

• Expressly excluding Outside Business Activities that are not “investment related.” Member firms and their registered persons need not focus on, for example, “side hustle” jobs, such as driving for a rideshare service, bartending on weekends, or being employed as a referee. 
   
• Making clear those requirements applicable only to registered persons (that is, non-investment related Outside Business Activities, which are now called “outside activities”) and those obligations applicable to associated persons (whether registered or non-registered; that is, Personal Securities Transactions, now called “outside securities transactions.”)
   
• Making clear when a member firm must acknowledge or approve an outside activity or outside securities transaction (whether or not for compensation). In short, member firms need not acknowledge or approve a registered person’s notice of an outside activity. If an outside securities transaction is not for compensation, the member firm needs only acknowledge the associated persons' written notice of the transaction, but it can require compliance with specific conditions or restrictions. If an outside securities transaction is for compensation, the member must approve or disapprove the transaction (or approve subject to limitations or conditions) and provide such decision in writing.
   
• Expressly excluding rentals, leases, purchases, and sales of main homes and rental properties. FINRA recognizes that these events are more common, pose lower risks, and require effort to review without commensurate benefits.
   
• Excluding activity conducted at non-broker-dealer affiliates of the member firm and clarifies that activities performed at dually registered firms are not performed “away” from the member firm (and therefore not “outside” or subject to the rule). An associated person’s activities conducted at an unaffiliated investment adviser would be covered by the proposed new rule.
   
• Making clear the assessments and evaluations a member firm must perform after receiving notice of a registered employee’s written notice of an outside activity or an associated person’s notice receipt of an outside securities transaction.
   
• Making clear that purchasing a security from an issuer or unaffiliated broker-dealer (known as “buying away”) continues to be covered by the proposed rule as an “outside securities transaction.”

FINRA has created a helpful flowchart of the proposed rule's application, as well as a comparison of how 10 scenarios would be treated under both the existing rules and the new proposed rule.

FINRA is seeking comments on the proposed rule, due May 13, 2025.