12.203 - Post-registration Requirements
12.203. Post-registration Requirements
(1) Minimum Capital Requirements.
(a) broker-dealer shall comply with the net capital requirements for brokers and dealers set forth in SEC Rule 15c3-1 (17 CFR 240.15c3-1), and the customer protection-reserves and custody of securities requirements set forth in SEC Rule 15c3-3 (17 CFR 240.15c3-3).
(b) A broker-dealer shall comply with SEC Rule 17a-11 (17 CFR 240.17a-11), as amended by FOCUS Report. The Director may by order restrict or condition the broker-dealer's right to transact business in the Commonwealth as he finds appropriate for the protection of investors.
(2) Record Keeping Requirements. Each broker-dealer shall maintain the following records:
(a) Copies of confirmations of transactions required by SEC Rule 10b-10 (17 CFR 240.10b-10).
(c) All records required to be maintained by any SRO or national exchange of which the broker-dealer is a member.
(a) Each broker-dealer must comply with the supervision requirements set forth in the FINRA member conduct rules.
(b) Each broker-dealer must designate at least one employee to be responsible for supervision of its business in the Commonwealth. Such person must be the broker-dealer himself or herself (if a sole proprietorship), an officer or partner registered in the Commonwealth, or a registered agent. If the broker-dealer is a FINRA firm, the person so designated shall have passed the principal's or supervisor's examination that is required by FINRA for the type of business that is conducted by the broker dealer.
(c) Every complaint submitted to a broker-dealer by a customer must be investigated by an employee of the broker-dealer specifically designated for this function. The broker-dealer must respond to all complaints in a timely manner.
(4) Financial Reporting and Notification Requirements.
(a) A broker-dealer shall comply with FOCUS Report Part II (Reports to be made by certain brokers and dealers).
(b) A broker-dealer shall notify the Director of any proposed transfer of control of such broker-dealer within 30 days prior to the date on which such transfer of control is to take place or such shorter period as the Director may permit, and shall furnish the Director such additional information relating to the transfer as the Director may require. A transfer of control is considered a material amendment of the application for registration for purposes of M.G.L. c. 110A, § 203(c).
(5) Duty to Amend Information Previously Filed.
(a) If the information contained in any application or amended application for registration as a broker-dealer, agent, or issuer-agent changes in a material way, or is or becomes inaccurate or incomplete in any material respect, an amendment shall be filed at the time of knowledge of such change. Such amendments shall be filed with the CRD or directly with the Division. Events considered material include, but are not necessarily limited to, the following:
1. Change in firm name, ownership, management, or control of a broker-dealer.
2. Change in any of a broker-dealer's partners, directors, officers, or persons occupying a similar status performing similar functions.
3. Change in the business address or creation or termination of a branch office.
4. Change in the supervisory personnel of a branch office.
5. Change in type of business engaged in by a broker-dealer.
6. Insolvency, dissolution, liquidation or a material adverse change or improvement of working capital.
7. Noncompliance with the minimum net capital requirements set forth in 950 CMR 12.203(1).
8. Termination of business or discontinuance of activities as a broker-dealer or agent.
9. Filing of a criminal charge or civil action against a person or entity, including a partner or officer, registered with the Division, in which an alleged violation of a securities law is involved.
10. Commencement of or notice of intent to commence any action by an administrative agency, regulatory agency, self-regulatory organization or court to consider whether to deny, suspend or revoke a registration, to impose a fine, injunction, cease and desist or other penalty upon the registrant, and the results of such action, including subsequent measures taken by any agency, organization or court.
11. Filing of a civil action against any person or entity registered with the Division alleging a cause of action other than a securities violation which, if proven, would materially affect the ability of the registrant to do business, including any acting materially affecting the financial condition of the registrant.
12. Any affirmative answers to Disclosure Questions in Section 14 of Form U-4.
13. Any restriction or condition placed on the activities of the broker-dealer or agent by any regulatory or self-regulatory agency.
(b) The registrant will have complied with the requirement of prompt notification pursuant to 950 CMR 12.203(5)(a) if notification has been filed with the Division in writing as soon as possible, but in no event more than 30 days after the registrant has knowledge of the circumstance requiring such notification.
(c) Any agent who, prior to January 1, 1977, filed an "Application for Registration as a Salesman," shall file a complete Form U-4 within ten business days after the information contained in the such application is or becomes inaccurate, incomplete or materially changed. Events requiring such a filing shall include, but are not limited to, those set forth in 950 CMR 12.203(5)(a).
(d) The Division regards the filing of amendments to update the records of agents within the supervisory responsibilities of the broker-dealer. A broker-dealer must have established procedures to ensure compliance with 950 CMR 12.203(5).
(6) An issuer-agent (other than one employed by or associated with an issuer registered under the Investment Company Act of 1940) shall make, maintain and preserve for a period of not less than three years books and records contain the following information:
(a) Copies of all writings confirming the sale or purchase of securities.
(b) The date and amount of each cash receipt or disbursement associated with such sale or purchase of securities.
(c) The number of shares involved, the certificate numbers, and the date each was delivered to or received from the investor.
(7) An issuer-agent (other than one employed by or associated with an issuer registered under the Investment Company Act of 1940) shall notify a customer in writing at or before the completion of each purchase or sale of a security, and a debit or credit for securities, cash, and other items for account of others of the following:
(a) The identity and price of the security.
(b) The account for which entered.
(c) The date of execution.
(d) The name of the person handling the transaction.
(e) The fact that the transaction was unsolicited, if so.
(8) An issuer-agent shall maintain a copy of the notice to the customer required by 950 CMR 12.203(7) at its office for a period of three years.
(9) All issuer-agents employed by or associated with an issuer registered under the Investment Company Act of 1940 shall maintain all records required to be maintained by SEC Rule 31a-1(17 CFR 270.31a-1), SEC Rule 31a-2 (17 CFR 270.31a-2) and SEC Rule 31a-3 (17 CFR 31a-3). The issuer-agent will be deemed to have complied with 950 CMR 12.203(9) if the issuer maintains such records.
(10) A broker-dealer shall immediately notify in writing the Director of the theft or unexplained disappearance of any securities or funds from any of its offices, setting forth all material facts known to it concerning the theft or disappearance.
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