Broker-Dealer Formation, Regulation and Compliance

Broker-dealers and their registered representatives seek the advice of Parker MacIntyre in such matters as applications for registration, compliance assistance, examination preparation, and arbitration and administrative action defense. Parker MacIntyre assists with every aspect of a broker’s business that implicates the complex regulatory scheme governing that business. We have experience assisting brokers of all sizes, including those dually registered as both broker-dealers and investment advisers (sometimes known as “hybrid advisers”).

Firms effecting transactions in securities are required to register as broker-dealers with the SEC and become Members of the Financial Industry Regulatory Authority (“FINRA”). Broker-dealers also must register with the state securities commissioners of all of the states in which they do business. Similar registration obligations are imposed upon the individuals owning broker-dealers (“Principals”) and those people doing business on behalf of a broker-dealer as financial advisors or stockbrokers (“Registered Representatives”). Accordingly, multiple layers of regulation are applicable to broker-dealers and registered representatives at all times. Parker MacIntyre is especially skilled at assisting broker-dealers and registered representatives in navigating these choppy regulatory waters.

While brokers are subject to jurisdiction on multiple levels, it is FINRA that acts as the primary compliance watchdog of the brokerage industry. FINRA is responsible for auditing and inspecting brokers; indeed, all brokers should expect to be audited by FINRA compliance examiners once every few years at a minimum. FINRA Members are also subject to strict reporting requirements in a host of areas—financial reporting and the pre-filing of marketing/advertising in certain situations, just to name a few. The FINRA Rules, which pervasively govern the conduct of brokers is an extremely voluminous complex body of law. Broker-dealers need a trusted source of advice when dealing with these compliance rules and requirements. While many turn to non-lawyer “compliance consultants” for day-to-day counsel in complying with the myriad FINRA rules, others have come to realize the preferability of receiving that advice from a law firm steeped in broker-dealer regulation. Parker MacIntyre is just that kind of law firm.

Parker MacIntyre attorneys have a wealth of experience interpreting the FINRA Rules, as well as the federal Securities Exchange Act of 1934 and state “Blue Sky” laws, all collectively governing the activities of brokers. Indeed, one of our attorneys, Robert D. Terry, teaches an annual class, as an Adjunct Professor of Law at Emory Law School, entitled Broker Dealer Regulation. Our attorneys have all dealt directly with FINRA, the SEC, and various state agencies on behalf of brokerage clients. We routinely represent brokerage clients in numerous matters, including, for example:

  • Advising on and assisting with the registration process for new broker-dealers, as well as with the change of control process, whereby one owner or control group transfers its FINRA registration to another owner or control group.
  • Drafting compliance policies and procedures for broker-dealers in satisfaction of the FINRA Rules and other applicable law.
  • Providing regulatory guidance to broker-dealers with respect to day-to-day compliance matters, ranging in diversity from recordkeeping and reporting issues to marketing/advertising review and sales practice rule compliance.
  • Processing and amending filings, such as Forms U-4, U-5, and Form BD, on FINRA’s online system for registration known as the Central Registration Depository (CRD).
  • Drafting numerous documents required under prevailing law or industry best practices, such as customer account agreements and suitability questionnaires, registered representative compensation agreements, placement agency agreements, and vendor agreements of all kinds.
  • Defending broker-dealer firms and registered representatives in administrative actions by FINRA, the SEC or the various state securities commissions.
  • Defending broker-dealer firms and registered representatives in connection with customer complaints escalated to FINRA’s mandatory arbitration proceedings.