DOB: Applying For Broker-Dealer Registration In Connecticut

Broker-dealer Registration Instructions

Who Must Register:

Generally, any person who is engaged in the business of effecting securities transactions for the account of others or for its own account must register as a broker-dealer with the Connecticut Department of Banking. Typically, a broker-dealer firm must register if it is 1) located in Connecticut and transacts securities business with Connecticut residents or with residents of other jurisdictions; or 2) located in another jurisdiction and transacts securities business for Connecticut residents. Individuals who work for a broker-dealer (e.g. "registered representatives" or "stockbrokers") are "agents" of that broker-dealer under the Connecticut Uniform Securities Act. Although they do not register as "broker-dealers", they would register as agents of their employing firm to transact securities business in the state.

FOR HELP State of Connecticut Department of Banking
Securities and Business Investments Division
260 Constitution Plaza
Hartford, Connecticut 06103

Phone:  (860) 240-8230

STEP 1:    What To File Electronically Through the Central Registration Depository or "CRD"

All broker-dealer firms that are members of the Financial Industry Regulatory Authority or "FINRA" (formerly the NASD) file for state and federal broker-dealer registration through FINRA's Central Registration Depository ("CRD" or "Web CRD"). Web CRD is an Internet-based depository that accepts filings and fees for broker-dealer firms and their agents and will electronically relay the information to us for processing. Through Web CRD, you will also renew your Connecticut broker-dealer registration and the registrations of your firm's agents.

Contact FINRA:  FINRA
9513 Key West Avenue
Rockville, Maryland 20850
Telephone: (301) 590-6500
Web site:
www.finra.org

File the Following Forms Electronically and Obtain Them from FINRA:

Form BD (Uniform Application for Broker-dealer Registration).  Use Form BD to file for initial registration as a broker-dealer in Connecticut.  Be sure to check off the "Connecticut" block.

Form U-4 (Uniform Application for Securities Industry Registration or Transfer).  Use Form U-4 to register at least one agent of your firm in Connecticut.

Form U-5 (Uniform Termination Notice for Securities Industry Registration).  Use Form U-5 when an agent leaves your firm's employ.

Form BDW (Uniform Request for Broker-dealer Withdrawal).  Use Form BDW to withdraw your firm's registration federally or with a particular state.


STEP 2:    Remit the Correct Connecticut Registration Fees to FINRA (fees are non-refundable)

Initial Registration Fees

Broker-dealer Firms:  $340
Agents:  $125 per agent.  Your firm must register at least one agent

Renewal Registration Fees

Unless suspended or revoked, every broker-dealer and agent registration expires on December 31st unless renewed. If your filing is up to date, simply remit the correct renewal fees to FINRA. Renewal fees are non-refundable.

Broker-dealer Firms:  $215
Agents:  $125 per agent.

STEP 3:    Submit Connecticut Supplemental Information Directly to Connecticut

A member of our staff will make every effort to contact you via e-mail or otherwise once you submit the Form BD and pay the registration fee through Web CRD.  The Department of Banking encourages the use of e-mail for correspondence and the submission of supplemental information associated with your broker-dealer application.

1. Financial Statements

What to File:
An original statement of financial condition as of a date within 60 days prior to the date your firm files its Connecticut broker-dealer application

Tip:  Most firms will be able to satisfy this requirement by providing a copy of their most recent audited financial statement  on SEC Form X-17A-5 Part III.  If this financial statement is more than 60 days old, the firm should also submit a copy of its most recent monthly or quarterly FOCUS report (SEC Form X-17A-5 Part II or Part IIa).

Capital Required:
Broker-dealer applicants and registrants must have and maintain the minimum net capital required by Securities and Exchange Commission Rule 15c3-1 and comply with SEC Rule 15c3-3 governing customer protection, reserves and custody of securities.

Financial Statement Content:

a) Disclose the nature and amount of your firm's assets, liabilities and capital. If the firm is a sole proprietorship, include personal assets and liabilities.

b) Net capital computation

c) If your firm has been in business for one year or more, the financial statement dated within 60 days of the application date must be audited (i.e. examined in accordance with generally accepted auditing standards and reported upon with an opinion expressed by an independent certified public accountant).  Exception:  The firm submits 1) its most recent audited statement of financial condition; and 2) an unaudited statement of financial condition as of a date within 60 days prior to the date the Connecticut broker-dealer application is filed.

If your firm has been in business for less than one year, it may submit an unaudited financial statement as of a date within 60 days before the Connecticut broker-dealer application is filed.
 

2. Connecticut Broker-dealer Supplement (3 pages; file size 66 KB)


Other Connecticut Requirements

Experience Requirements

Who Must Meet the Experience Requirement?

  • Every person listed on Schedule A, B or C of Form BD who is involved in managerial or supervisory responsibilities
  • If the broker-dealer is a partnership, at least 2 active partners (or if there is only one active partner, then that one)
  • If the broker-dealer is a corporation, at least 2 active officers (or if there is only one active officer, then that one)
  • Applicants with personnel having no managerial or supervisory responsibilities or not being active as officers or partners should provide a dated written statement, signed by an officer or other authorized person of similar rank, supporting their claim that these individuals should receive a waiver from the experience requirement and the reason for the waiver request.

What Type of Experience is Required?

  • Employment in the securities business as a broker-dealer or agent, spending a major portion of working time in the securities business for at least 3 years within the 7 calendar years preceding the date of the Connecticut broker-dealer application
  • The agency determines that the individual is otherwise qualified by knowledge and experience. Applicants relying on this provision should furnish sufficient information on the individual's work experience and education to enable the agency to fully evaluate the request. The Regulations permit the agency to substitute a qualifying examination for the experience requirements
  • Attorney with at least 3 years of substantial experience in securities law
  • Accountant with at least 3 years of substantial experience in the sale of securities

Principal's Examination

All officers, partners or sole proprietors who act as managers and all managers must pass an examination as principal (e.g. Series 24) given by the SEC or by a securities self-regulatory organization registered under the Securities Exchange Act of 1934.

Applicants with personnel having no managerial or supervisory responsibilities should provide a dated, written statement, signed by an officer or other authorized person of similar rank, supporting their claim that these individuals should receive a waiver from the principal's examination requirement and the reason for the waiver request.

Testing Requirements 
(see
Common Questions and Answers on Testing Requirements)

Branch Office Registration - Each broker-dealer operating a Connecticut branch office, as defined in Section 36b-3(4) of the Connecticut Uniform Securities Act, must register that branch office through the CRD system.

Form DBA-1 (Trade or Assumed Name Notification) - File a Form DBA-1 if, for example, an agent working from a Connecticut branch office uses a trade or assumed name not reflected on Form BR or if the firm uses a trade or assumed name not included on its Form BD.

Agent Registration

No individual may represent a broker-dealer in effecting securities transactions within or from Connecticut unless that individual is registered as an agent of the broker-dealer whom he or she represents. Any corporate or partnership application for broker-dealer registration must, under the agency's Regulations, include the registration of at least one agent.

  • Form U-4: File a Form U-4 for at least one agent with CRD. Include a checked off "Connecticut" box as well as the original signature of an authorized individual. Also include a non-refundable registration fee of $125 per agent.

Examinations: Each broker-dealer agent must pass the Series 63 examination (Uniform State Agents Securities Law Exam) and an examination given by FINRA that qualifies the agent to sell particular securities products (e.g. Series 7 for general securities products; Series 6 for mutual funds). See Common Questions and Answers on Testing Requirements.

  • Form U-5: If an agent leaves the employ of a broker-dealer, the old employer must file written notice with the CRD on Form U-5 within 30 days following the agent's departure. The notice should state why the agent ceased employment. If a broker-dealer does not file Form U-5 in a timely manner, the broker-dealer may be billed a renewal fee for the agent.

Note: If an agent is transferring from another registered broker-dealer, the Connecticut Uniform Securities Act imposes a $100 transfer fee.  The fee for a mass transfer of agents is $75 per agent.

Multiple Registration

Broker-dealer Agent and Investment Adviser Agent (or Agent of Issuer)

Multiple registration is permissible where 1) the broker-dealer agent obtains prior written consent from his or her employers to act in the multiple capacity; and 2) the employers' written consent is filed with the department. Employer consent letters must have original signatures, be dated and signed by an officer, partner or other authorized person of similar rank. Exception: No consent is needed where the employers are affiliated or under common management or control.

Broker-dealer Agent of More than Broker-dealer

An individual may be registered as a broker-dealer agent with multiple broker-dealers after receiving the department's written consent. The department may consent if the broker-dealer agent procures from each employing broker-dealer, and files with the department, a written, dated undertaking stating that the employer: 1) consents to the multiple employment and setting forth the effective date of the multiple employment; and 2) agrees to assume joint and several liability with all other employers for any act or omission of the broker-dealer agent during the employment period. Note: The undertaking may omit the joint and several liability component where the broker-dealers are affiliated or under common management and control.

STEP 4:   Work With Us to Speed Up Your Application

Once we receive your application, we may be contacting you with questions or comments. Be sure to promptly respond to our information requests. By law, the Commissioner may deem an application denied for abandonment where the applicant fails to respond to an information request within 60 days.

How Will I Know When My Firm is Registered in Connecticut?

Under the Connecticut Uniform Securities Act, your broker-dealer registration is not effective until the registrant's name has been entered on the Register of Broker-dealers. We will notify you in writing of that fact.  Until your firm and its agents have become registered under the Connecticut Uniform Securities Act, it is unlawful to transact securities business in or from Connecticut.

POST-REGISTRATION REQUIREMENTS

Amendments

After your firm has become registered, you have a duty to amend your Form BD through the CRD system to reflect all material changes.

Most Firms Do Not Have to File Annual Audited Financial Statements

A Connecticut-registered FINRA member firm does not have to file annual audited financial statements with Connecticut as long as 1) the firm is, and remains, a member of a self-regulatory organization ("SRO") that is registered under laws the SEC administers; 2) the firm files annual audited financial reports with that SRO; and 3) the firm is current in filing all required financial reports with that SRO.

Non-FINRA Member Firms and Firms That Have Not Complied With Federal Financial Reporting Requirements Must Still File Annual Audited Financial Statements With Connecticut

Non-FINRA member firms and FINRA member firms that have not complied with federal financial reporting requirements must still file audited financial statements with Connecticut each year.  The financial statements must contain the information required by SEC Rule 17a-5(d) .  Financial statements should be filed within 60 days after the end of the firm's calendar or fiscal year. If the date of the firm's audited financial statement is outside this 60 day "window", include with your audited financial statement an unaudited statement dated within the 60 day period.

Licensing Information



Content Last Modified on 7/17/2018 2:09:22 PM