When a member intends to add a line of business, FINRA has shown that this type of expansion is often a significant event that impacts the firm’s supervisory and compliance infrastructure, personnel, and finances. When such an impact occurs, FINRA staff is required to verify that the member continues to meet each of the membership criteria identified in Rule 1014. However, FINRA recognizes that any proposed new business line’s characterization as a “material change in business operations” ultimately depends on assessing all relevant facts and circumstances. Certain proposed new business lines, such as market-making, underwriting, and acting as a dealer Read more about 1017 Material Change Determination[…]
The Firm should review areas of its business to determine if any current or future changes to the Firm’s business may warrant a change in membership application (a.k.a. “CMA” or “1017”). FINRA requires firms to file a continuing membership application (CMA) whenever they seek to expand their operations activities, and for other business events, as indicated in NASD Rule 1017(a) (Continuance in Membership Application or CMA). Firms also must file an application whenever they seek to modify or remove restrictions previously imposed in a membership agreement (a membership agreement change). Failure to comply with this requirement may provide a basis Read more about 1017 Change in Membership[…]
When a broker-dealer implements a significant change in the strategies and activities of the business, FINRA requires firms to file a continuing membership application (“CMA”) to modify its membership agreement. Through this requirement, FINRA seeks to help protect investors by ensuring that firms reflect these changes in their policies, procedures, and supervisory and compliance systems.
MasterCompliance has been assisting clients with the purchase or sale of broker-dealers and the related FINRA application process since 2003. At times, clients will come to us with the need for a broker-dealer, and often, the best way to accomplish that goal is to buy an existing broker-dealer. There are many benefits to purchasing an existing broker-dealer. We have years of experience and vast expertise in putting these deals together to benefit all parties involved.
What do you do when you add a new product to your firm’s approved offering listing? How do your reps know that a new product has been added? Do your policies & procedures even address new products? What sort of training do you provide? Does your firm need to file a Continuing Membership Application (Form CMA)? As a compliance specialist for FINRA-registered broker-dealers, we encounter these type of questions from our clients on a regular basis, including FINRA, SEC, and MSRB compliance veterans.
The FINRA journey of changes in ownership and control for a FINRA member firm is one that can be difficult to traverse without a proper guide.
The FINRA Continuation of Membership Application (“CMA”) process is covered under NASD Rule 1017. The rule provides that should a member firm wish to make any changes as detailed in Rule 1017(a), an application must be filed with FINRA. More specifically, these events include: a merger, an acquisition, an asset acquisition, a change in ownership or control or a material change in business operations as defined in NASD Rule 1011(k).