The VP of Compliance for Allianz  Life Insurance Company of North America recently received interpretive guidance re: registration and qualification requirements for the CEO of a member firm engaged solely in the solicitation and sale of redeemable securities of companies registered under the Investment Company Act and variable contracts.

    Background Information.   Allianz Life Financial Services, a registered B/D and FINRA member, is engaged solely in the solicitation and sale of redeemable securities of investment companies (mutual funds) and variable contracts.  Its RR's are Series 7's (General Securities) or Series 6's (IC, variable contracts products);  its principals have Series 24 licenses or Series 26 Licenses (IC, variable contracts products).  They only sell mutual fund shares and variable contracts.

CEO for ALFs manages and supervises the B/D's activities - in part, he has overall authority to supervise the firm's securities business and also is responsible for supervising the activities of certain registered principals, including certain general securities principals of the firm.

Question:  May the CEO be registered and qualified as an investment company and variable contracts products principal, rather than as a general securities principal?

    FINRA Analysis and Decision.  Based on the following NASD/FINRA rules, and to the extent that the securities activities of ALFS and its registered persons are limited solely to mutual funds and variable contracts, ALFS's chief executive officer may be registered and qualified as a Series 26 Principal, rather than as a general securities principal - in order to manage and supervise the firm's business and supervise the activities of certain registered principals of the firm, including certain general securities principals.

The decision is based on the facts, as presented by Allianz and the following applicable rules:

• NASD Rule 1021 requires an officer of a member who's actively engaged in the management of the member's investment banking or securities business to be registered and qualified in a category of principal registration appropriate to his or her functions and responsibilities. 
• NASD Rule 3010(a)(2) requires a firm to designate an appropriately registered principal(s) with authority to supervise each type of business in which the firm engages that requires registration as a broker-dealer. 
• NASD Rule 3010(a)(5) requires the assignment of each registered person to an appropriately registered supervisor.
• NASD Rule 1022(d) provides that a Series 26 Principal is qualified to engage in, including manage and supervise, activities involving, among others:  redeemable securities of companies registered under the Investment Company Act and variable contracts.

For further details, click onto:   [ FINRA Interpretive Letter, 7/29 ]