Annual Compliance

Annual Compliance Requirements: Year-End Priorities

It’s that time of the year again! As the fourth quarter ticks by, we have compiled a helpful end of year to-do list to aid small broker-dealers in addressing and closing out important annual compliance requirements.

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2019 FINRA Renewal Program

2019 FINRA Renewal Program for BDs and RIAs

The 2019 FINRA Renewal Program for Broker-Dealers, Investment Adviser Firms, Investment Adviser Agents, Investment Adviser Representatives, and Branches is scheduled to begin on November 12, 2018.

Firms should note the following key dates in the renewal process:

  • November 12, 2018 – Preliminary statements are available via the E-Bill section of WebCRD. Preliminary statements are not mailed to firms.
  • December 17, 2018 – Full payment of Preliminary Statements is due.
  • January 2, 2019 – Final Statements are available via the E-Bill section of WebCRD.
  • January 21, 2019 – Full Payment of Final Statements is due.

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FINRA Enhances Disclosure Review Process

As I’m sure you already know from reading our previous blogs on the subject, FINRA Rule 3110(e) (Responsibility of Member to Investigate Applicants for Registration) requires that member firms must “ascertain by investigation the good character, business reputation, qualifications, and experience of an applicant” prior to submitting a Form U4 and requesting to associate and register such an applicant with the firm. However, as recently announced, FINRA has made enhancements to its disclosure review process that will make this verification easier than ever.  Such enhancements will allow member firms to rely upon FINRA’s verification process for purposes of compliance with the requirement to conduct a search of public records relating to bankruptcies, judgments and liens.

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Crowdfunding: Funding Portal Registration – Part II

[Continued from Crowdfunding: Funding Portal Registration – Part I]

Funding Portal Registration Process

Firms seeking to register as funding portals must do so via completion of an application process with FINRA.  The registration process for a funding portal is similar to, but much less comprehensive and exhaustive, the New Member Registration process completed by applicants wishing to become broker-dealers.

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Crowdfunding: Funding Portal Registration – Part I

Title III of the Jumpstart Our Business Startups (JOBS) Act, enacted in 2012, provides guidance and regulation relating to securities offered or sold through crowdfunding activities. In 2015, the Securities and Exchange Commission (SEC) added onto this initial act by creating a new ruleset that implemented a regulatory framework for intermediaries that facilitate such crowdfunding transactions. This includes regulations for a relatively new intermediary: the funding portal. Securities Act Section 4(a)(6) (otherwise known as “Regulation CF”) requires that intermediaries in crowdfunding transactions be registered with the SEC as either a broker-dealer or a funding portal.

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Form U5

What is Form U5 and What is it used for?

The Form U5 is the Uniform Termination Notice for Securities Industry Regulations. Upon terminating a registered representative or an investment advisor from a firm, whether voluntary or involuntary, a Form U5 must be filed. The form must be filed in the appropriate jurisdictions and/or self- regulatory organizations (“SROs”). It can be filed electronically with the Central Registration Depository (“CRD”) or the Investment Adviser Registration Depository (“IARD”).  Firms can also submit paper filings.  Filers submitting paper filings should read the Special Instructions for Paper Filers in conjunction with the other instructions to the form. In addition, paper filers should contact the appropriate jurisdiction and/or SRO for specific filing instructions or requirements. Once filed, the individual’s registration will be terminated in the appropriate jurisdictions and/or self-regulatory organizations.

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Form U4

What is Form U4 and What Sections are on it?

Form U4 is the Uniform Application for Securities Industry Registration or Transfer.  Representatives of broker-dealers, investment advisers, or issuers of securities must fill out the Form U4 to become registered in the appropriate jurisdictions and/or SROs.  The form is filled out electronically within the Central Registration Depository (“CRD”) or the Investment Adviser Registration Depository (“IARD”). Read More…

What is the SIE Exam?

As mentioned in our previous post, What is on the Series 7 exam, the FINRA has restructured the examination process and implemented a new exam, the Securities Industry Essential exam (“SIE”).  On October 1, 2018, the SIE exam will become a prerequisite to all of the FINRA’s representative-level qualification exams (“rep-level exams”). PURPOPSE OF THE Read more about What is the SIE Exam?[…]