411. Capital Compliance
(a)(1) Unless otherwise permitted by FINRA, a capital acquisition broker must suspend all business operations during any period in which it is not in compliance with applicable net capital requirements set forth in SEA Rule 15c3-1.
(2) FINRA may issue a notice pursuant to FINRA Rule 9557 directing a capital acquisition broker that is not in compliance with applicable net capital requirements set forth in SEA Rule 15c3-1 to suspend all or a portion of its business.
(b) No equity capital of a capital acquisition broker may be withdrawn for a period of one year from the date such equity capital is contributed, unless otherwise permitted by FINRA in writing. This paragraph does not preclude a capital acquisition broker from withdrawing profits earned.
(c) Subordinated Loans, Notes Collateralized by Securities and Capital Borrowings
(1) All subordinated loans or notes collateralized by securities must meet such standards as FINRA may require to ensure the continued financial stability and operational capability of the capital acquisition broker, in addition to those specified in Appendix D of SEA Rule 15c3-1.
(2) Unless otherwise permitted by FINRA, each capital acquisition broker that is a partnership and whose general partner enters into any secured or unsecured borrowing, the proceeds of which will be contributed to the capital of the broker, must submit to FINRA such information as needed by FINRA to determine whether such proceeds qualify as capital acceptable for inclusion in the computation of the net capital of the broker.
Adopted by SR-FINRA-2015-054 eff. April 14, 2017.
Selected Notice: 16-37.