SEC Dealer Rule and FINRA Registration: What to Know

Published: Mar 7, 2024
By: TaNeka Ray
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Understand whether the SEC’s recently adopted Dealer Rules impact you by watching this brief video featuring TaNeka Ray from EisnerAmper Compliance Desk. TaNeka explains why some investment advisors and private funds now have to register with the SEC as dealers, become members of the Financial Industry Regulatory Authority (FINRA), and comply with the federal securities laws and regulatory obligations. She also discusses how your firm should consider analyzing the rule to determine whether the firm's trading activities fall within the definition. This video is part of a regulatory and compliance series offering insights to help you navigate a changing SEC regulatory landscape.

Transcript

TaNeka Ray:

Hello, welcome to EisnerAmper's, SEC Regulatory Compliance Series. My name is TaNeka Ray, and I work in the regulatory compliance group here at EisnerAmper. Today I'll give you an overview of what you need to know about the SEC's recently adopted dealer's rules on February 6th, 2024. The SEC adopted the dealer's rules, expanding the definition of a dealer and government securities dealer. Under the dealer's rule market participants such as investment advisors and private funds who engage in the buying and selling of securities for their own accounts that have the effect of providing liquidity to other market. Participants are required to one, register with the SEC as dealers. Two become members of the financial industry Regulatory authority, which is often referred to as FINRA and three, comply with the federal securities laws and regulatory obligations to determine whether your firm is a dealer or a government securities dealer as defined under the dealer's rule, your firm should consider analyzing the rule to determine whether the firm's trading activities fall within the definition.

This determination should be drafted in the memo form and stored in the firm's books and records to comply with the dealer's rules. First, register with the SEC by filing a form bd. The form BD is the uniform application for broker dealers applying for registration. With the SEC, your firm can create and submit the form BD electronically with FINRA through the central registration depository, often referred to as the CRD website. Next, apply for FINRA membership by filing a new membership application form referred to as Form MA. The form is structured to collect information, data, and documentation from your firm in order for FINRA staff to evaluate the firm against the standards for admission contained in finra Rule 10 14. The completed form MA with all the required questions answered and all required supporting documentation attached must be filed electronically with FINRA through CRD website and FINRA has 180 days after a firm submits the form NMA to issue a decision. Last, implement a compliance framework that incorporates policies, procedures, and training that is aligned to the business. The dealer's rule becomes effective 60 days after publication in the federal register, and firms will be allotted a one year compliance after the effective date. Well, that was a glimpse into what you need to know about the SEC's recently adopted dealers rule. Again, my name is TaNeka Ray with EisnerAmper. I welcome you to connect with me on LinkedIn. Thank you for watching, and join me in the next episode in the SEC Regulatory and Compliance Series.

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