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Securities rules move forward after committee questions on FINRA membership and ID.me biometric data
Summary
The committee approved a restructuring of securities rules and several regulatory updates, including expanded qualification timelines and updated net-capital thresholds. Lawmakers raised privacy concerns about a new requirement to include an applicant's FINRA membership application and whether that could require biometric data via ID.me; the department offered follow-up contacts and the rules received a positive recommendation after a short pause.
Department of Commerce and Insurance staff presented a wide restructuring of the Tennessee securities rules, splitting the industry regulation section into five chapters by registrant type and making substantive changes: extending the period that a professional may maintain exam qualifications from two to five years for certain registrants, prohibiting failure to pay an arbitration award as a prohibited business practice, and updating minimum net capital thresholds for non-FINRA broker-dealers and investment-adviser firms.
Representative Renaud raised a privacy concern after identifying a new provision that asks for a copy of an applicant's FINRA membership application. She said a constituent feared that obtaining that document could force an adviser into an ID.me identity-verification process that captures biometric data. Jacob Stray (associate counsel) and April Odom (director of registration) explained that FINRA membership is optional for broker-dealers, that the FINRA membership agreement itself likely does not include biometric data and that biometric capture is tied to external identity-verification systems (e.g., ID.me) used for certain online filings, not to the membership agreement itself. Department counsel offered to connect the constituent with division staff to resolve specifics.
After a motion to pause the recommendation was made and additional clarification and a commitment to follow up, the committee moved the securities package with a positive recommendation; the audit trail shows the Senate recorded ayes and one no was recorded in the House. Members asked the department to follow up with the constituent and with FINRA contacts if necessary. The rules restructure aims to provide clearer regulatory segments for different registrant types and to align net-capital and custody/audit requirements with current business practices.
