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).
Initially, when a firm receives FINRA approval to become a broker/dealer, the membership agreement has specific criteria which defines the types of business the firm may engage. If the firm wants to make changes to certain lines of business, operations, or otherwise, then it must submit a CMA, also known as the Continuing Membership Application, to obtain FINRA approval.