Firms conducting broker or dealer activities are required to register with the SEC and become a FINRA member (except in certain narrow circumstances where an exemption is available). Absence of an exemption, the SEC registration is conditioned on obtaining FINRA membership, which can be an overwhelming process. We can assist and handle the FINRA new membership process. We also offer outsourced FINRA licensed principals and provide assistance in onboarding licensed personnel.
FINRA requires each member to file a continuing membership application (CMA) to modify its membership agreement with respect to a change of the member firm's ownership or control or a material change in the member firm's operation. The events that require a CMA filing include:
· Mergers;
· Acquisitions;
· Transfer of 25% or more of assets, business or line of operation that generates 25% or more revenues;
· Change in ownership or control; and
· Material change in business operations.
A material change in operations may include:
· Removing or modifying a restriction on the member firm imposed by the membership agreement;
· Adding new market making, underwriting or dealer activity for the first time;
· Adding a business activity that requires a higher minimum net capital requirement;
· Increasing a substantial number of branches or personnel; and
· Adding a new business line that may involve a change in a material aspect of its operation.
A materiality analysis may be necessary to determine whether a CMA is required. The CMA processes can be lengthy and overwhelming, requiring experienced legal and compliance guidance. We have extensive knowledge of the SEC self-regulatory organization regime and the basis on which FINRA operates, as well as experience with the FINRA CMA. We can assist firms in handling FINRA’s CMA process to obtain approval critical for your business change.