[ by Howard Haykin ]

Effective immediately, FINRA will waive the requisite continuing membership application (CMA) fee where FINRA determines that a CMA is proposing less significant changes that do not require substantial staff review.  Also effective immediately, FINRA will refund the application fee (less a $500 processing fee) if an applicant withdraws a new membership application (NMA) or CMA within 30 days after filing the application with FINRA.

Discussion -  CMA Fee Waiver.   CMA applications are subject to an application fee under Section 4(i) of Schedule A to the FINRA By-Laws.  Effective immediately, amendments to Section 4(i) of Schedule A provide that FINRA will waive the CMA fee where FINRA determines that the CMA is proposing less significant changes that do not require substantial staff review.  

In the following examples, the CMA fee may be waived where the proposed change:

• does not make any day-to-day changes in the applicant’s business activities, management, supervision, assets or liabilities, and the applicant is only proposing a change in the:

► applicant’s legal structure (e.g., changing from a corporation to an LLC);

► equity ownership, partnership capital or other ownership interest in an applicant held by a corporate legal structure that is due solely to a reorganization of ownership or control of the applicant within the corporate legal structure - e.g., reorganizing only to add a holding company to the corporate legal structure’s ownership or control chain of the applicant); or

►  percentage of ownership interest or partnership capital of an applicant’s existing owners or partners resulting in an owner or partner owning or controlling 25% or more of the ownership interest or partnership and that owner or partner has no disclosure or disciplinary issues in the preceding five years; or

• is filed by an applicant in connection with a direct or indirect acquisition or transfer of 25% or more in the aggregate of the applicant’s assets or any asset, business or line of operation that generates revenues composing 25% or more in the aggregate of the applicant’s earnings measured on a rolling 36-month basis where the applicant also is ceasing operations as a broker or dealer - including filing a Form BDW with the SEC - and there are either:

►  no pending or unpaid settled customer related claims - including, but not limited to, pending or unpaid settled arbitration or litigation actions - against the applicant or any of its associated persons; or,

►  pending or unpaid settled customer related claims - including, but not limited to, pending or unpaid settled arbitration or litigation actions - against the applicant or its associated persons, but the applicant demonstrates in the CMA its ability to satisfy in full any unpaid customer related claim - e.g., sufficient capital or escrow funds, proof of adequate insurance for customer related claims.

An applicant seeking a waiver of the CMA fee should submit its request to FINRA in writing as part of the supporting documentation in Standard 1 (Overview of the Applicants) submitted with the applicant’s Form CMA.

Discussion - NMA and CMA Fee Refund.   Also effective immediately, amendments to NASD Rules 1013 (New Member Application and Interview)  and 1017 provide that if an applicant withdraws an NMA or CMA within 30 days after filing the application, FINRA shall refund the application fee, less $500, which FINRA will retain as a processing fee.  If the applicant determines to again seek membership or apply for approval of a change in ownership, control or business operations, the applicant must submit a new NMA or CMA (under NASD Rule 1013 or NASD Rule 1017, as applicable) and requisite application fee pursuant to Schedule A to the FINRA By-Laws.

FINRA Staff Contacts.   Direct questions to:   Allison Reid, Assoc.  Director, Membership Application Program (MAP), at (212) 858-4418;   Lisa Robinson, Assoc. Director, MAP, at (212) 858-4764;  Joseph Sheirer, Director and Counsel II, MAP, at (212) 858-5132.

For further details, go to:   [FINRA RegNote 13-11, March 2013].