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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How to Register as an RIA: State Registration vs. SEC Registration

In our previous blog on Registered Investment Advisers (RIAs), “How to Register as an RIA: What is a Registered Investment Adviser?”, we discussed some important basics of RIAs – how does one define an RIA, what is Fiduciary Duty, why do RIAs need to register, what is the difference between state registration and SEC registration, etc. Today, we will return to the topic of state registration vs. SEC registration in order to provide a more thorough examination of the issue.

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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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What is on the Series 7 exam?

The financial services industry is heavily regulated.  In order to enter into the industry and sell securities, you must first prove that you have the competence.  In order to showcase your competency, the Financial Industry Regulatory Authority (“FINRA”) requires that you take the Series 7 exam, also known as the General Securities Registered Representative Qualification Exam.  In order to take the exam, you must be sponsored by a FINRA member firm. Read More…

Investment Advisers: SEC vs. State Registration

Due to the Dodd-Frank legislation, as of mid-2012, there are rules for registration eligibility that are primarily determined by a firm’s assets under management (“AUM”). For all firms below $100 million AUM, registration is required with the appropriate state jurisdictions.  For firms above $100 million AUM, registration will be at the SEC level, unless a registration exemption exists. In order to account for fluctuations in AUM, the SEC has imposed, by rule, a buffer for Investment Advisers with AUM between $90 million and $110 million. An adviser may register with the SEC once it reaches AUM of $100 million. An adviser must register with the SEC if it’s AUM is $110 million or more at the time they file their annual ADV amendment. Once registered with the SEC, a mid-size adviser can remain registered with the SEC as long as its AUM is at least $90 million at the time they file their ADV amendment.  Read More…

Rule change related to Registration and Continuing Education

As summarized below, FINRA recently filed with the SEC a proposed rule change to adopt, with amendments, the NASD and Incorporated NYSE rules relating to qualification and registration requirements as FINRA rules in the Consolidated Rulebook. The proposed rule change also restructures the current representative-level qualification examinations and creates a general knowledge examination and specialized knowledge examinations.  In addition, the proposed rule change amends the Continuing Education (“CE”) requirements.

Registration Requirements

FINRA has adopted registration requirements to ensure that associated persons attain and maintain specified levels of competence and knowledge pertinent to their function.  The current FINRA registration rules include both NASD rules and rules incorporated from the NYSE. Read More…

Important Annual Regulatory Certifications – Rule 4517

FINRA Rule 4517 – Member Filing and Contact Information Requirements

FINRA Rule 4517 requires member broker-dealers to report and update to FINRA all contact information required by FINRA via Firm Gateway.  Specifically, each registered broker-dealer is required to report and update all contact information required by FINRA via the Firm Gateway.  Additionally, broker-dealers must update its required contact information promptly, but in any event not later than 30 days following any change in such information. Read More…

Is a Series 24 Required to Own a BD?

The question of who is required to have an active FINRA Series 24 (General Securities Principal) registration is often not as easy to answer as you may think. As a broker-dealer compliance consulting specialist, we encounter this question from seasoned FINRA compliance veterans and new broker-dealers alike.

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