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[…]
This blog is a follow up to our Change to New York IAR Registration blog, and a reminder that the August 31st deadline to submit a waiver for registration to New York is looming. Effective February 1, 2021, New York now requires Individuals to register in the state. Previously, NY has not held 65/66 licenses; however, this has changed. Note the registration standards for state-registered firms and SEC-registered firms differ. State-Registered Firms The new rule requires all investment adviser representatives with more than five clients in the state of New York to register as an investment adviser, unless exempt from Read more about New York IAR Registration Waiver Deadline Reminder[…]
Under rule 17a-14 under the Securities Exchange Act of 1934 and rule 204-5 under the Investment Advisers Act of 1940, broker-dealers registered under section 15 of the Exchange Act and investment advisers registered under section 203 of the Advisers Act are required to deliver to retail investors a relationship summary, Form ADV Part 3, disclosing certain information about the firm. Read all the General Instructions as well as the particular item requirements before preparing or updating the relationship summary.
Advisers have a fiduciary obligation to recommend a share class that will provide their clients with the lowest overall expenses, based on anticipated transaction costs and holding periods. Moreover, if the Firm recommends mutual funds that carry 12b-1 fees when lower share class options exist, the Firm must make full and fair disclosure, including conflicts associated with making investment decisions in light of the receipt of 12b-1 fees; and selecting the more expensive 12b-1 fee paying share class when a lower-cost share class is available for the same fund. Share class selection is a regulatory priority. The SEC has indicated that examiners will conduct focused, risk-based examinations to assess whether investment advisers are meeting their obligations to
- Seek best execution;
- Disclose material conflicts of interest; and
- Maintain an effective compliance program.
Investment adviser should determine its approach for meeting these three obligations and train its personnel to comply with any policies, procedures, and guidelines governing share class selection.
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: