Registration & Licensing - Procedure

Question 1

How is the registration of broker-dealers, agents, IAs, and IARs accomplished

Answer 1

By filing a registration application with the State Administrator, along with a form giving consent to service of process.

Question 2

When is the consent to service of process required to be filed?

Answer 2

Only with initial applications - no need for renewals.

Question 3

What does the registration application include?

Answer 3

• Form of business organization
• Place of business and proposed method of doing business;
• Qualifications and business history of applicant (including that of any partners, officers, or directors of broker-dealers and investment advisers)
• fingerprints of partners, directors, or officers of broker-dealers and investment advisers, and their representatives
• listing of any injunctions, administrative orders, or convictions for misdemeanors or felonies in the securities businesses;
• applicant’s financial condition and history
• for IAs only, any information required to be furnished to any client or prospective client.

Question 4

What must a federal covered adviser do to register in a State?

Answer 4

File notice in the State by filing the same documents as have been filed with the SEC for federal registration - the Form ADV (ADViser registration); in additiona, a consent to service of process must be filed;

Question 5

Each State requires an initial licensing fee for the registration of each:

Answer 5

Broker-dealer
Agent
Investment Adviser
Investment Adviser Representative

Question 6

Initial Notice Fee

Answer 6

Required by each State for each federal covered adviser that transacts business in the State.

Question 7

When is a registration filing considered complete?

Answer 7

When both the proper documents and the filing fee have been received. “In the mail” not good enough.

Question 8

Annual Fee requirements

Answer 8

Each licensed person must pay an annual renewal registration or notice fee to the State.

Question 9

Is there any pro-rating of the annual fee if the person registers mid-year?

Answer 9

No! The full year fee must still be paid.

Question 10

How soon does Registration become effective from the filing date (assuming no problems)?

Answer 10

30 days. An earlier or later date may be specified by the Administrator.

Question 11

Is an additional filing fee required for a successor firm completing the unexpired portion of the year?

Answer 11

No.

Question 12

When does each registration or notice filing expire under the Uniform Securities Act?

Answer 12

December 31st.

Question 13

CRD Registration

Answer 13

If an individual (only agents of broker-dealers or investment adviser representatives are agents) is registered with the SEC through the Central Registration Depository (CRD), the information required in the State application is satisfied. The only requirement is that the State Administrator be notified of the CRD registration, and the appropriate filing fees be paid.

Question 14

What is the CRD system used for?

Answer 14

Broker-dealers and their agents that are registered at the Federal level.

Question 15

What do Investment Advisers and their representatives register through to give notice?

Answer 15

The IARD System - Investment Adviser Registration Depository.

Question 16

What does the IARD system handle?

Answer 16

the registration of both State registered advisers and Federal covered advisers;

notice requirements for Federal covered advisers; and

registration of investment adviser representatives (IARs), which is required for both IARs of State registered advisers and IARs of Federal covered advisers that have field notice in the State

Question 17

What does an investment advisory firm have to file to register with the SEC or a State?

Answer 17

Form ADV (+ fee)

Question 18

For Federal covered advisors, when does the notice filing expire?

Answer 18

December 31st

Question 19

Rule for annual update to Form ADV?

Answer 19

IA must file annual updating amendment to Form ADV on file in IARD. Required whether adviser is Federal covered or State registered. Must be filed within 90 days of IA’s fiscal year end.

Question 20

What does an IA file if there is a material change that occurs during the year?

Answer 20

“Other-Than-Year-End Amendment”

Question 21

Time to file “other-than-year-end amendment” under NASAA rules for State registered advisers

Answer 21

Within 30 days of occurrence

Question 22

Time to file “other-than-year-end amendment” under the SEC for Federal covered advisers

Answer 22

Promptly

Question 23

What must an individual complete to register through the CRD as an agent of a broker-dealer or IARD as an IAR?

Answer 23

U-4 Form (Uniform Securities Industry Application)

Question 24

When must a U-4 be updated?

Answer 24

Within 30 days of year-end renewal date.

Question 25

What is filed if an individual is terminated and when?

Answer 25

The former employing firm files a U-5 termination form with CRD or IARD.

Question 26

Time to file U-5

Answer 26

Within 30 days of termination

Question 27

What is filed if an individual or firm is subject to disciplinary action by a State or Federal regulator?

Answer 27

That regulator files a U-6 Form with CRD or IARD

Question 28

Treatment of U-6 Form

Answer 28

Goes on the firm’s or individual’s record, which can be viewed by the public

Question 29

When must a U-6 Form be filed?

Answer 29

Promptly, but no later than 30 days after the action has been taken.

Question 30

Treatment of U-6 Forms for items with resolution still pending

Answer 30

Serious written customer complaints alleging a felony are considered reportable items that go into the firm’s or individual’s CRD or IARD file and can be viewed by the public. The item is marked that there has been no proof of the claim made yet presented;