McCormick & O'Brien, LLP
Solutions to Problems

Broker-Dealer Services

Broker-Dealer Services

We regularly guide companies through The Financial Industry Regulatory Authority (FINRA) new member application process and through changes or amendments to their existing broker-dealer business models. Our attorneys and staff have been involved in the formation or ongoing compliance efforts of over 200 financial services industry firms.

As part of the new membership process, we act as the point of contact between the potential broker-dealer and the regulators, and advise and guide the broker-dealer through that intricate process. This involves obtaining the requisite information from the potential broker-dealer, translation of this knowledge into the appropriate forms and documentation, and presentation to and correspondence with FINRA. Additional items that may be included in a New Membership Application include waiver requests, specialized documents for certain securities (private placements, options, municipals, for example). We assist in negotiating clearing agreements, structuring back office operations, and work closely with accountants and other service providers in the industry.

McCormick & O'Brien provides Broker Dealers with customized comprehensive compliance programs. The compliance program can be tailored to include:

  • Written Supervisory Procedures and Compliance Manuals
  • Financial and Operations Principal Registration
  • Financial Recordkeeping and financial statement production and support
  • Continuing Education Plans and Needs Analysis
  • Anti-Money Laundering Compliance Plans & Audits
  • Business Continuity Plans
  • Annual Compliance Meetings
  • General Compliance and Consulting
  • FINRA Web Applications (Registration)
  • Review of Business Operations
  • SRO Examination Preparation

Alternatively, McCormick & O'Brien can be retained to provide compliance consulting to your Broker Dealer on an as-requested basis.

We assist clients in keeping abreast of trends and developments by frequently interacting with FINRA's senior attorneys. We regularly counsel clients on a variety of issues including supervision, compensation, sales and trading practices, website content, securities lending and credit activities, best execution, advertising, communications with the public, disclosure and development of new securities products and services, financial operations matters, anti-money laundering privacy, mark-up and mark-down issues, confirmations, net capital requirements, revenue sharing, Forms BD and BDW, networking and other referral arrangements, Forms U4 and U5, point-of-sale disclosure, books and records and reporting obligations. We also advise clients on suitability issues involving fee-based accounts, electronic communications, share classes and sub-accounts.

We also handle anti money laundering matters and all compliance requirements stemming from the Bank Secrecy Act, USA PATRIOT Act, and implementing regulations. We are involved in the creation, tailoring, and updating of procedures to fit each firm's regulatory needs. On an ongoing basis, we draft, update, and streamline AML procedures in response to new and updated regulations, feedback from regulators, and for ease of use and clarity.

Business Continuity Planning is a requirement to create and maintain procedures to be implemented in the event of a significant business disruption. Our activity here involves the creation of procedures that are designed based upon securities activities, whether or not clients of the firm would be provided access to their funds and securities through the firm, and that provide information to FINRA and clients. BCP procedures are always updated in response to changes in firm information, and regulatory publications and feedback.

We handle firm and individual registration thru FINRA's Central Registration Depository System (CRD). CRD is used as a registration database with the main purpose of keeping the information of a firm and its registered persons in order so that FINRA can perform its regulatory oversight of the industry.

We assist firms with the following essential form filings: Form BD, Form BDW, Form BR, Form U4, Form U5, and Form NRF, as well as myriad other CRD-related functions . The Web CRD system also facilitates the collection and disbursement of fees associated with filings processed through the system. We retrieve account activity summaries, processed transactions, deposit, transfer and transaction details upon request and send important notifications to our retainer clients on a regular basis in order to avoid funds deficient transactions. This is especially helpful during the registration "Renewals" period so that our clients may avoid unnecessary renewal fees due prior to the year's end.

We also assist firms in acquiring CRD access through a process called Entitlement. Entitlement forms are used to designate an individual as an Organization's Primary, Alternate or Replacement Primary Account Administrator.

State registrations for broker-dealers and individuals can be quite a process. We have much experience in this area and work closely with our clients whenever a state registration issue poses more difficulty than simply checking a box on a form. Application for state registrations through form filing is the easy part, but not all states give immediate approval. Each state has their own set of requirements and may ask for additional items and documentation from the firm and/or individual. Such items may include, but are not limited to financial statements, various affidavits and disclosure information if applicable. A state may require individuals to hold specific licenses and/or have certain securities experience. Some states have a time requirement in which the firm or individual must produce all requested documentation. Our clients rely on us for assistance and guidance in this all too often, arduous process. Essentially, our goal here is to save you valuable time by communicating directly with the state regulatory body, drafting letters and gathering documentation on your broker-dealer's behalf.

In addition to CRD, we also handle other FINRA online information systems, such as Web IR, eFOCUS and the FINRA contact system (FCS).

Drawing upon the skill and experience of our Litigation, Compliance and Corporate practices, we offer valuable counseling to clients when responding to subpoenas, handling litigation and regulatory inquiries, or seeking to establish better internal controls.