FINRA Proposes Rule 3290 to Simplify Outside Activities and Private Securities Transaction Requirements

FINRA has filed a proposed rule change with the SEC that would significantly modernize how firms oversee outside business activities (OBAs) and private securities transactions (PSTs). Proposed FINRA Rule 3290 would replace two longstanding rules—Rule 3270 (Outside Business Activities) and Rule 3280 (Private Securities Transactions)—with a single, consolidated framework.

The goal: focus regulatory oversight on activities that pose meaningful risk to investors while reducing unnecessary compliance burdens tied to lower-risk conduct.

What’s Changing?

Consolidation of Existing Rules

Rule 3290 would merge the current OBA and PST requirements into one unified standard. Under the existing framework, registered persons must disclose virtually all outside activities and securities transactions conducted away from the firm—even when those activities have no investment nexus. The proposed rule is designed to simplify these obligations and reduce redundancy.

Sharper Focus on Investment-Related Activities

Rather than casting a wide net over all outside activities, the proposed rule concentrates on investment-related conduct, including activities involving securities, crypto assets, commodities, real estate, derivatives, insurance products, and similar financial assets.

Activities unrelated to investing would still require disclosure, but generally would not require prior firm approval or heightened supervision unless specific risk factors are present.

Tiered Disclosure and Approval Requirements

Under Rule 3290, associated persons would provide prior written notice to their firm before engaging in:

• Investment-related outside activities that do not involve securities transactions
• Outside activities that involve securities transactions

When an activity involves direct or indirect compensation, firms would be required to evaluate and potentially approve it. For uncompensated activities, firms would typically acknowledge the notice and determine whether any conditions or limitations are appropriate.

Firm Responsibilities Under the Proposed Rule

Firms would be expected to assess whether an outside activity:

• Falls outside the individual’s role with the firm
• Involves compensation or presents potential conflicts of interest
• Involves firm customers
• Could compromise the associated person’s responsibilities or create the appearance that the activity is part of the firm’s business

This approach is intended to ensure appropriate supervision and investor protection without imposing excessive review requirements on low-risk activities.

Thoughtful Exclusions to Reduce Burden

The proposal also includes several targeted exclusions to avoid unnecessary reporting, including:

• Personal investments not made for compensation, including transactions covered by FINRA Rule 3210
• Securities transactions among immediate family members where no compensation is received
• Activities conducted on behalf of the member firm or its affiliates, such as advisory or insurance activities at an affiliated entity

These exclusions are designed to eliminate redundant filings while keeping the focus on activities that may present material conflicts or elevated risk.

Why This Matters

Proposed Rule 3290 reflects FINRA’s broader effort to modernize and clarify compliance obligations while maintaining strong investor protections. By prioritizing oversight of higher-risk, investment-related activities, the rule aims to strike a more effective balance between regulatory supervision and operational efficiency.

Industry feedback from FINRA’s earlier Regulatory Notice 25-05 comment period played a key role in shaping the proposal, with many stakeholders supporting a simplified and more risk-based approach.

Next Steps and Timing

The proposal, filed as SR-FINRA-2026-001, is currently under SEC review. If approved, Rule 3290 would replace Rules 3270 and 3280 upon its effective date.

Firms should begin evaluating how this unified framework may impact their compliance programs, including potential updates to written supervisory procedures, employee training, and internal review processes.

Bottom Line:

FINRA’s proposed Rule 3290 represents a meaningful shift toward a more streamlined, risk-focused approach to regulating outside business activities and private securities transactions—one that seeks to enhance compliance efficiency while continuing to protect investors.