Checklist for Organizational Change
Overview – FINRA Rule 1017 (Application for Approval in Change of Ownership, Control or Business Operations) specifies the events that require a member firm to submit an application for continuing membership (CMA) using Form CMA. The events include, among others, a merger, acquisition or transfer, or ownership change. When FINRA receives an application, it will conduct an initial review to determine whether the CMA is substantially complete in order for FINRA to begin a meaningful review of it. A CMA that is not substantially complete will be rejected and the applicant will lose a portion of the CMA fee. One factor that may impede the CMA review process pertains to the documentation and information that may be lacking in an application when it is first submitted to FINRA. This checklist is intended to provide firms with guidance on some key information that may help facilitate the CMA review process.
Form CMA is organized by 14 standards for admission as set forth under Rule 1014(a) and specifies the documents and information required to support each standard. The items listed in this Checklist are also organized by standard and focus on the standards and their related documentation and information that an applicant may inadvertently overlook when submitting the application. Firms should treat this checklist as a starting point for preparing Form CMA. Firms are advised to review the rules applicable to a CMA, including Rules 1014 and 1017, together with Form CMA. During the course of the review process, FINRA may request additional documents and information as necessary to render a decision on the application.
FINRA reminds firms that there are some timing considerations for submitting a CMA depending upon the contemplated change. For example, a member must file a CMA for approval of a change in ownership or control at least 30 days prior to such change. But notwithstanding this timing consideration and others—where a member or associated person has an unpaid arbitration award or unpaid settlement related to an arbitration at the time of filing the CMA—the member may not effect such change until the member has demonstrated in the application its ability to satisfy such obligation in accordance with Rule 1014 and IM-1014-1. FINRA reminds firms that responses and documentation in a foreign language will not be accepted and must be certified and translated to English, having converted all currencies to U.S. dollars. In addition, FINRA maintains firms’ confidentiality but will not accept redacted documents.
FINRA Compliance Tool Disclaimer – This optional tool is provided to assist member firms in fulfilling their regulatory obligations. This tool is provided as a starting point, and you must tailor this tool to reflect the size and needs of your firm. Using this tool does not guarantee compliance with or create any safe harbor with respect to FINRA rules, the federal securities laws or state laws, or other applicable federal or state regulatory requirements. This tool does not create any new legal or regulatory obligations for firms or other entities.
Updates – This tool was last updated on May 16, 2022. This tool does not reflect any regulatory changes since that date. FINRA periodically reviews and update these tools. FINRA reminds member firms to stay apprised of new or amended laws, rules and regulations, and update their WSPs and compliance programs on an ongoing basis.
Staff Contact(s) – FINRA's Office of General Counsel (OGC) staff provides broker-dealers, attorneys, registered representatives, investors and other interested parties with interpretative guidance relating to FINRA’s rules. Please see Interpreting the Rules for more information.
OGC staff contacts:
MAP staff contacts:
(212) 858-4000 (Option 5 – Membership Applications)
Web CRD® Considerations
Have you submitted the appropriate firm form filings (e.g., BD Amendment, BDW)?
To determine whether firm form filings are required, consider the following:
- Is a Form BD Amendment required to update ownership/control information on the firm, or to add new branch offices or business lines resulting from the organizational change?
- Is a predecessor firm withdrawing from the industry, requiring submission of a Form BDW?
To submit Form BD or BDW filings, your Web CRD user(s) with appropriate entitlement should access Web CRD. If you have questions about whether succession rules apply, contact the SEC's Office of Interpretive Guidance at (202) 551-5777.
Does your firm qualify for a mass transfer?
The Mass Transfer Program allows for the transfer of registration information in mass for qualified individuals when a firm is involved in any one of the following, and which involves at least 50 individuals: Acquisitions (Successor), Asset Purchases, Consolidations, Mergers and Successions. If the organizational change qualifies for a mass transfer, the representatives will be systematically terminated with the predecessor firm and registered with the successor firm without requiring submission of Form U4 filings, Form U5 filings, and fingerprint cards. To learn more about the mass transfer process and whether it would be suitable for your firm, contact the FINRA Gateway Call Center at (301) 869-6699 and ask to speak with a mass transfer representative.
If you do NOT mass transfer representatives, have you submitted the appropriate form filings and fingerprint cards?
If your representatives will be moved from one firm to another without a mass transfer, Form U4 filings and fingerprint transactions must be submitted to register the representatives with the new firm, and Form U5 filings will be required for any representatives who will be terminated from their current firm. To submit Form U4 or U5 filings, your Web CRD user(s) with appropriate entitlement should access Web CRD.
After a mass transfer, have you printed and provided a current Form U4 to each registered representative?
The successor firm should encourage each registered representative to verify that the information on record is correct, as the successor firm is now responsible for the records (including disclosure information) of these representatives.
Have you verified via Web CRD that all registrations have been requested or have transferred as intended?
If you submitted Form U4 filings to register representatives with the new firm, you may wish to verify that all necessary registrations have been requested. If you moved representatives via a mass transfer, be aware that some states may block mass transfers, so it is important to validate registrations in Web CRD after the mass transfer is complete.
Contact the FINRA Gateway Call Center at (301) 869-6699.
FINRA User Account Management Considerations
Have you created the necessary user accounts for individuals moving to the new firm?
If the predecessor firm is submitting a full Form BDW, the predecessor firm's entitlement accounts will be terminated once the firm termination is complete. The successor firm should consider whether new user accounts are necessary for any of the following systems:
- FINRA Contact System
- Report Center
- Order Audit Trail System (OATS)
- Regulation Filing Applications
- Web CRD
- Web Information Request (Web IR)
The successor firm's Super Account Administrator (SAA) can create or modify account administrators and users.
If the successor firm has not yet named an SAA or needs to replace the current SAA, the firm should review the instructions on the SAA Entitlement page on how to entitle someone at your firm to serve in this role.
Have you deleted user accounts for individuals that no longer require access?
It is the SAA's responsibility to remove entitlement immediately for account administrators or users who are no longer with the firm. An account administrator is also able to modify and/or delete user accounts who no longer require access; however, account administrators cannot alter the access of another account administrator - that can only be performed by an SAA. User accounts are deleted via the FINRA Account Management tool. See the FINRA Entitlement Program: Entitlement Reference Guide for more information and navigational support.
If you access the Report Center, are the appropriate MPID(s)/MSRB number(s) associated with your user accounts?
The Entitlement group will update the successor's SAA account with any new MPID(S)/MSRB number(s) that can then be entitled to account administrators and users.
Contact the FINRA Gateway Call Center at (301) 869-6699.
Have you notified TRACE that the firm is going through a change in organization?
To notify TRACE that a change is occurring, please call FINRA Operations at (866) 776- 0800 or email FINRA Operations.
Have you terminated the predecessor firm's FINRA Participation Agreement?
If the firm is filing a full Form BDW filing to terminate, the firm also needs to submit written notice to disable its FINRA Participation Agreement. The FINRA Participation Agreement can be found on the Transparency Services Legal Agreements page.
Have you submitted a new FINRA Participation Agreement and TRACE Order Forms as necessary?
A new signed contract is required when a merger occurs. The TRACE Order Form enables you to request, modify, or terminate your TRACE service. The TRACE Order Form can be found on the Transparency Services Legal Agreements page.
Contact FINRA Operations at (866) 776-0800.
Have you established or updated the appropriate reporting relationships in OATS?
In order for a firm to give other organization(s) permission to transmit on the firm's behalf, the relationship needs to exist in OATS. See Chapter 6 of the OATS Web Interface User Guide for instructions on accessing, creating, and modifying firm relationships.
Have you transferred necessary open limit orders to the successor's MPID?
If the predecessor firm has open limit orders on their books that will be executed under the successor firm's MPID, the firm should route the orders to the new MPID, and report the route to OATS, or provide the predecessor's Broker/Dealer Number in the "Originating Broker/Dealer Number" field on the OATS report.
Have you requested a User ID and password for an OATS administrator?
If a new administrator is necessary based on the firm's change, a new User ID and password must be requested.
Have you ensured that all necessary departments within the firm are submitting to OATS as required?
FINRA has seen instances, during organizational changes, of non-reporting of required order events because the firm has not clearly identified all departments and/or individuals responsible for OATS submissions. You should verify that all departments are submitting to OATS as required.
Contact the OATS Help Desk at (800) 321-6273.
Have you updated the FINRA Contact System (FCS) with current information?
FINRA Member firms are required to update contact information via the FINRA Contact System (FCS) within 30 days following any changes and to review required contact information annually, pursuant to NASD Rule 1160. For questions, contact the FINRA Gateway Call Center at (301) 869-6699.
Have you contacted NASDAQ Subscriber Services (if applicable to your firm's business)?
Contact NASDAQ Subscriber Services at (212) 231-5180. NASDAQ Subscriber Agreements and forms can be found on the NasdaqTrader website.
Have you contacted the MSRB (if applicable to your firm's business)?
Contact the MSRB at www.msrb.org, or by calling (202) 838-1330.
Have you notified any service providers the firm uses?
If the firm uses a service provider to do any or all of the firm's filings, ensure that the service provider knows which identifiers to use when filing on the firm's behalf.
Have you notified the appropriate jurisdictions of the change?
You should be aware of the jurisdiction rules governing your firm's business as well. View a list of state securities contacts from the NASAA website.
FINRA Contact Summary
|Rule 1017 (notifying FINRA of change)||Membership Application Program: (800) 321-6273 and Appropriate district.|
|Web CRD||Gateway Call Center: (301) 869-6699|
|Mass Transfers||Gateway Call Center: (301) 869-6699|
|Account Management||Gateway Call Center: (301) 869-6699|
|TRACE||TRACE Toll Free Help Line: (866) 776-0800, or by email.|
|OATS||OATS Help Desk (800) 321-6273|
If you have feedback about additional items that should be included on this checklist or would like to suggest improvements to the checklist, please email the FINRA Compliance Tools team.