Regulatory Notice 16-37

SEC Approves FINRA’s Capital Acquisition Broker (CAB) Rules

Effective Dates: January 3, 2017 (CAB Member Application and Associated Person Registration Rules) and April 14, 2017 (All Other CAB Rules)

Summary

The Securities and Exchange Commission (SEC) approved FINRA’s rule set for firms that meet the definition of “capital acquisition broker” (CAB) and that elect to be governed under this rule set. CABs are firms that engage in a limited range of activities, essentially advising companies and private equity funds on capital raising and corporate restructuring, and acting as placement agents for sales of unregistered securities to institutional investors under limited conditions. Firms that elect to be governed under the CAB rule set are not permitted, among other things, to carry or maintain customer accounts, handle customers’ funds or securities, accept customers’ trading orders, or engage in proprietary trading or market-making.

The CAB rules become effective on April 14, 2017. In order to provide new CAB applicants with lead time to apply for FINRA membership and obtain the necessary qualifications and registrations, CAB Rules 101-125 will become effective on January 3, 2017. FINRA will begin accepting applications for firms that are not broker-dealers but wish to register as CABs, for existing member firms requesting to elect CAB status, and for CAB associated person registration and qualification, on January 3, 2017.

The text of the CAB rules is available on FINRA’s website.

Questions concerning this Notice should be directed to Joseph P. Savage, Vice President and Counsel, Regulatory Policy, at (240) 386-4534.

Related Documents: 

DateTitleFormat - Size
10/17/2016Capital Acquisition Broker (CAB) RulesPDF - 59.56 KB