Often times, broker-dealers decide to restructure and make changes in organization.  These changes in organization may be in the form of a merger, acquisition, or a succession. Once a firm has decided to restructure, there are many questions that a firm should consider in order to make the transition easy in relation to FINRA.  Please note that the information that will be discussed is only in relation to FINRA.  There may be other non-FINRA systems that you should consider.

Have You Reviewed Rule 1017?

Rule 1017 establishes that a firm must receive FINRA approval to undergo certain changes in organization such as mergers, acquisitions, asset transfers and material changes in business.  While reviewing Rule 1017, a firm will learn what type of information it needs to submit to the district to seek approval in advance of the organization change.

Have You Contacted Your District Office?

As mentioned, a firm must seek approval in advance of the organization change.  How far in advance?  The application must be submitted 30 days before a change is scheduled to occur.

What Will The Surviving Firm Look Like After The Change In Organization?

It is important to understand what the surviving firm will look like after the change in organization.  Depending on the change, the Membership Agreement may need to be updated.  The firm should also make sure that representatives understand the impact of the reorganization and how it affects the types of business the firm is approved to do.

Have You Submitted the Appropriate Firm Form Filings?

Firms must determine whether they are required to file forms on Web CRD.  Among the forms to consider are Form BD Amendment and Form BDW.  Form BD Amendment is often required when a firm changes ownership, changes control, adds business lines, or adds branch offices.  Form BDW is required when a firm withdraws from the industry.  In the scenario of a restructure, Form BDW would be required if a predecessor firm was withdrawing from the industry.

Does Your Firm Qualify For A Mass Transfer?

To qualify for the Mass Transfer Program, a firm must have at least 50 individuals and is involved in an acquisition, assets purchase, consolidation, merger, or succession.   The Mass Transfer Program expedites the process by allowing the transfer of registration information in mass for qualified individuals.  Under the program, representative will be systematically terminated with the predecessor firm and registered with the successor firm.  This process eliminates the requirement to submit a Form U4, Form U5, and fingerprint cards.

Have You Deleted User Accounts For Individuals That No Longer Require Access?

Firms should consider who has access to FINRA user accounts such as IARD, FINRA Contact System, Report Center, Order Audit Trail System (OATS), Regulation Filing Applications, Web CRD, and Web Information Request (Web IR).  An account administrator should make sure to remove any individual that no longer should have access to these accounts.

The questions considered above are by no means exhaustive.  There are many areas a firm should consider that weren’t discussed such as TRACE considerations or OATS considerations.  To get a more detailed list of questions to consider, please follow the link to review the Checklist for Changes in Firm Organization.