Material Business Changes

1017 Business Changes, Expansions, and Broker/Dealer Acquisitions

Are you thinking about changing the products your broker/dealer offers, adding additional representatives or branches beyond the safe harbor provisions, or changing the ownership structure of your firm? Material changes to a broker dealer’s business or ownership structure may require the firm to file an application for continuing membership applications (1017 application or CMA’s) with FINRA. FINRA member firms planning to implement changes in ownership, control or operations and those firms wanting to remove or modify restrictions placed on them by FINRA must file an application pursuant to FINRA Membership Rule 1017.

Securities Compliance Management (“SCM”) offers experienced personnel to prepare these filings and act as the liaison with FINRA staff during the approval process. SCM has successfully completed a number of 1017 filings for a wide variety of firms and understands the factors considered for approval. SCM’s focus is to provide a complete application and is committed to expediting the approval process.

A 1017 application must address the same 14 standards as a new broker dealer application. Information that may need to be included in the application consists of a business plan outlining the change and its impact on your business, financial projections on how a change in business, number of reps or new branches will affect your revenues, expenses and net capital, supervisory procedures, prerequisite experience of the supervisors, etc.

SCM will assist your team or serve in a full capacity on behalf of the firm to prepare, file, and facilitate 1017 applications. Our services include:

  1. Preparing the 1017 application
  2. Compliance with Rule 1014 standards
  3. Determining the structure of the new organization
  4. Review of the membership agreement
  5. Liaison with the appropriate FINRA Distract Office to facilitate the application

Rule 1017 governs the process for a change in ownership, control, or business operations. FINRA approval is required for a number of different types of changes in firm organization, including certain mergers, acquisitions, asset transfers, and material changes to the business.