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Unless otherwise provided, terms used in the Rule 1000 Series shall have the meaning as defined in Rule 0160.
The term "Applicant" means a person that applies for membership in FINRA under Rule 1013 or a member that files an application for approval of a change in ownership, control, or business operations under Rule 1017.
(b) "Associated Person"
The term "Associated Person" means: (1) a natural person registered under FINRA rules; or (2) a sole proprietor, or any partner, officer, director, branch manager of the Applicant, or any person occupying a similar status or performing similar functions; (3) any company, government or political subdivision or agency or instrumentality of a government controlled by or controlling the Applicant; (4) any employee of the Applicant, except any person whose functions are solely clerical or ministerial; (5) any person directly or indirectly controlling the Applicant whether or not such person is registered or exempt from registration under the FINRA By-Laws or FINRA rules; (6) any person engaged in investment banking or securities business controlled directly or indirectly by the Applicant whether such person is registered or exempt from registration under the FINRA By-Laws or FINRA rules; or (7) any person who will be or is anticipated to be a person described in (1) through (6) above.
(c) "Covered Pending Arbitration Claim"
The term "Covered Pending Arbitration Claim" means:
(1) For purposes of a business expansion as described in IM-1011-2 and Rule 1017(a)(6)(B):
(A) An investment-related, consumer initiated claim filed against the Associated Person in any arbitration forum that is unresolved; and whose claim amount (individually or, if there is more than one claim, in the aggregate) exceeds the hiring member's excess net capital.
(2) For purposes of an event described in Rule 1017(a)(6)(A):
(A) An investment-related, consumer initiated claim filed against the transferring member or its Associated Persons in any arbitration forum that is unresolved; and whose claim amount (individually or, if there is more than one claim, in the aggregate) exceeds the transferring member's excess net capital.
For purposes of this definition, the claim amount includes claimed compensatory loss amounts only, not requests for pain and suffering, punitive damages or attorney's fees, and shall be the maximum amount for which the Associated Person or transferring member, as applicable, is potentially liable regardless of whether the claim was brought against additional persons or the Associated Person reasonably expects to be indemnified, share liability or otherwise lawfully avoid being held responsible for all or part of such maximum amount.
The term "Department" means the Department of Member Regulation of FINRA.
The term "Director" means a member of the FINRA Regulation Board.
The term "district" means a district established by the FINRA Regulation Board.
(g) "district office"
The term "district office" means an office of FINRA located in a district.
(h) "final criminal matter"
The term "final criminal matter" means a criminal matter that resulted in a conviction of, or plea of guilty or nolo contendere ("no contest") by, a person that is disclosed, or is or was required to be disclosed, on the applicable Uniform Registration Forms.
(i) "FINRA Board"
The term "FINRA Board" means the Board of Governors of FINRA.
(j) "FINRA Regulation Board"
The term "FINRA Regulation Board" means the Board of Directors of FINRA Regulation.
The term "Governor" means a member of the FINRA Board.
(l) "Interested FINRA Staff"
The term "Interested FINRA Staff" means an employee who directly participates in a decision under Rule 1014 or 1017, an employee who directly supervises an employee with respect to such decision, an employee who conducted an investigation or examination of a member that files an application under Rule 1017, the District Director for the relevant district, and the head of the Department.
(m) "material change in business operations"
The term "material change in business operations" includes, but is not limited to:
(1) removing or modifying a membership agreement restriction;
(2) market making, underwriting, or acting as a dealer for the first time; and
(3) adding business activities that require a higher minimum net capital under SEA Rule 15c3-1;
(n) "principal place of business"
The term "principal place of business" means the executive office from which the sole proprietor or the officers, partners, or managers of the Applicant direct, control, and coordinate the activities of the Applicant, unless the Department determines that the principal place of business is where: (1) the largest number of Associated Persons of the Applicant are located; or (2) the books and records necessary to provide information and data to operate the business and comply with applicable rules are located.
(o) "sales practice event"
The term "sales practice event" means any customer complaint, arbitration, or civil litigation that has been reported to the Central Registration Depository, currently is required to be reported to the Central Registration Depository, or otherwise has been reported to FINRA.
(p) "specified risk event"
The term "specified risk event" means any one of the following events that are disclosed, or are or were required to be disclosed, on an applicable Uniform Registration Form:
(1) a final investment-related, consumer-initiated customer arbitration award or civil judgment against the person for a dollar amount at or above $15,000 in which the person was a named party;
(2) a final investment-related, consumer-initiated customer arbitration settlement or civil litigation settlement for a dollar amount at or above $15,000 in which the person was a named party;
(3) a final investment-related civil action where: (A) the total monetary sanctions (including civil and administrative penalties or fines, disgorgement, monetary penalties other than fines, or restitution) were ordered for a dollar amount at or above $15,000; or (B) the sanction against the person was a bar, expulsion, revocation, or suspension; and
(4) a final regulatory action where (A) the total monetary sanctions (including civil and administrative penalties or fines, disgorgement, monetary penalties other than fines, or restitution) were ordered for a dollar amount at or above $15,000; or (B) the sanction against the person was a bar (permanently or temporarily), expulsion, rescission, revocation, or suspension from associating with a member.
The term "Subcommittee" means a subcommittee of the National Adjudicatory Council that is constituted pursuant to Rule 1015 to conduct a review of a Department decision issued under the Rule 1000 Series.
(r) "Uniform Registration Forms"
The term "Uniform Registration Forms" means the Uniform Application for Broker-Dealer Registration (Form BD), the Uniform Application for Securities Industry Registration or Transfer (Form U4), the Uniform Termination Notice for Securities Industry Registration (Form U5) and the Uniform Disciplinary Action Reporting Form (Form U6), as such may be amended or any successor(s) thereto.
|Amended by SR-FINRA-2020-011 eff. Sept. 1, 2021.
Amended by SR-FINRA-2019-030 eff. Sept. 14, 2020.
Amended by SR-FINRA-2019-009 eff. May 8, 2019.
Amended by SR-FINRA-2008-008 eff. June 26, 2008.
Amended by SR-NASD-2007-015 eff. May 7, 2007.
Amended by SR-NASD-2003-07 eff. March 24, 2004.
Amended by SR-NASD-99-67 eff. Nov. 15, 2000.
Amended by SR-NASD-97-81 eff. Jan. 16, 1998.
Amended by SR-NASD-97-28 eff. Aug. 7, 1997.
Amended by SR-NASD-94-14 eff. July 20, 1994.
Amended by SR-NASD-91-45 eff. Feb. 1, 1992.
Adopted by SR-NASD-82-24 eff. July 20, 1984.
Selected Notice: 04-10, 07-20, 20-15, 21-09.