The USA defines an agent as any individual who represents a broker-dealer or an issuer in effecting or attempting to effect transactions in securities for their clients. Agents are individuals in a sales capacity who represent broker-dealers or issuers of securities. Any person who meets the definition of an agent must register with the states they do business in. To register with the state securities Administrators, you must:
- Submit an application;
- Provide a consent to service of process;
- Pay filing fees;
- Post a bond if required by the Administrator; and
- Take and pass an examination if required by the administrator, the examination may be written, oral, or both.
Submitting an Application
All persons must complete and submit an initial application (as well as renewals) to the state securities Administrator. The application must contain whatever information the Administrator may require by rule, and may include:
- Form and place of business (broker-dealers);
- Proposed method of doing business;
- A list of all jurisdictions in which the applicant is registering (or already registered);
- Qualifications and business history (broker-dealers must include the qualifications and history of partners, officers, directors, and other persons with controlling influence over the organization);
- Court-issued injunctions and administrative orders;
- Adjudications by the SEC or any securities SRO, such as FINRA within the past 10 years;
- Convictions of misdemeanors involving a security or any aspect of the securities business, (including charges as well as convictions);
- Felony convictions, whether securities related or not (including charges as well as convictions);
- Financial condition and history (broker-dealers only, but only of the firm—no credit reports on the officers);
- Any current unsatisfied liens and judgments must be shown as well as any declaration of bankruptcy within the past 10 years;
- Any information to be furnished or disseminated to any client or prospective client, if the applicant is an investment adviser; and
- In the case of an individual registrant (agent or investment adviser representative), citizenship information
Provide A Consent to Service of Process
New applicants for registration must provide the Administrator of every state in which they intend to register with a consent to service of process. The consent to service of process appoints the Administrator as the applicant’s attorney to receive and process noncriminal securities-related complaints against the applicant. Under the consent to service of process, all legal documents (e.g., subpoenas or warrants) received by the Administrator have the same legal effect as if they had been served personally on the applicant.
Payment of Initial and Renewal Filing Fees
States require filing fees for initial applications as well as for renewal applications. If an application is withdrawn or denied, the Administrator is entitled to retain a portion of the fee. There is no filing or registration fee until renewal on December 31st.
Effectiveness of Registration
Unless a legal proceeding is instituted or the applicant is notified that the application is incomplete, the license of an agent becomes effective at noon, 30 days after the later of the date an application for licensing is filed and is complete or the date an amendment to an application is filed and is complete. An application is complete when the applicant has furnished information responsive to each applicable item of the application. The Administrator will notify the employing firm of effectiveness, and they will tell the new registrants when they are “good to go.” By rule or by order, the Administrator may authorize an earlier effective date of licensing. In other words, there could be an occasion where, in effect, a person was the subject of a rush order.
In the same manner as a registration becomes effective on the 30th day after application, a request to withdraw registration also becomes effective on the 30th day after submission. However, should there be any legal proceedings in progress, the withdrawal will be held up until resolution of the issue. In any event, once withdrawal has taken place, the Administrator has jurisdiction of the former registrant for a period of one year.
For more information on agent registration, check out our Registering as an Agent for a Broker-Dealer and Exclusions from Registration as an Agent blogs now.
MasterCompliance provides expert consulting, outsourcing, and implementation tools in planning and budgeting your firm’s compliance responsibilities. If there are any areas where you would like to explore additional assistance or services, please contact us.