So, you’ve decided to start or own a broker-dealer. You have completed Form NMA, submitted it to FINRA Gateway via the New Membership Application process with all of your supporting documents, and have gone through a round or 2 of information requests with the FINRA Membership Application Program Group (the “MAP Group”). Now, you have just received a request to sit down with FINRA for the Membership Interview.
So what do you do?
The FINRA Membership Interview is one of the most critical steps in the FINRA New Member Application (NMA) (or Continuing Membership Application (CMA)) process. The interview, which is required by NASD Rule 1013(b)(1), is a meeting between the FINRA staff processing the application (i.e., the MAP Group), the Examination Manager and Regulatory Coordinator who will be assigned to the new broker-dealer once the NMA application is approved, and the primary persons who will own, control, and manage the broker-dealer. The FINRA membership interview must occur prior to the issuance of a decision on the FINRA membership application. In addition, Rule 1013(b)(2) requires that FINRA provide the firm with at least seven (7) days advance notice of the Membership Interview (in writing), unless otherwise agreed to by FINRA and the firm.
Rule 1013(b)(3) requires that the Membership Interview be scheduled no later than 90 days after the filing of the NMA application or 60 days after the last information request from FINRA has been satisfied, whichever comes later. Further, Rule 1013(b)(4) stipulates that the Membership Interview is to be conducted at the FINRA district office in which the main office of the new broker-dealer is proposed to be based.
Okay, so the rules require that there be a Membership Interview – but why?
The FINRA Membership Interview serves a number of central purposes to the NMA process. First, the Membership Interview enables the FINRA MAP Group staff to identify and discuss any unresolved issues, problems, or concerns about the application and provides the firm with the opportunity to respond thereto. Second, the interview affords FINRA staff the opportunity to meet face-to-face with the firm’s principals, question them, and gather additional information to assist in determining whether the firm meets the membership standards. In other words: do the firm’s supervisors have the experience and qualifications to run the broker-dealer? Does the firm have the requisite financial means to operate the firm? Third, the interview affords the firm an opportunity to ask questions about the NMA process and FINRA Rules, and to gather other information relating to the regulation of a new broker-dealer. Lastly, the Membership Interview enables FINRA staff to provide key information to the firm in order to help ensure that, if the application is approved, the firm understands its obligations as a FINRA member firm.
[Continued in FINRA Membership Interview – Part II]