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Publications des investisseurs Guide de l'enregistrement des courtiers et des courtiers Division des opérations et des marchés 1 Commission des valeurs mobilières des É.-U. Avril 2008 Table des matières Introduction Qui est tenu de s'inscrire Qui est un Québécois Qui est un commerçant Quoi faire si vous pensez être un courtier ou un courtier? Courtiers courtiers et concessionnaires doivent généralement s'inscrire auprès de la SEC quotAssociated Personsquot d'un courtier-courtier Intrastate Broker-courtiers-concessionnaires qui limitent leur entreprise aux titres exclus et exemptés courtier-concessionnaires doivent s'inscrire avant de vendre des titres non enregistrés - y compris les placements privés (ou le règlement D) Exonération de l'émetteur Exigences d'exonération des courtiers et courtiers étrangers concernant les courtiers et les courtiers en valeurs mobilières du gouvernement et des municipalités, y compris les conventions de rachat Règlements spéciaux s'appliquant aux banques et autres institutions financières Agence en valeurs mobilières Courtiers en valeurs mobilières et courtiers immobiliersAgents Relations courtier - Groupes Comment s'inscrire en tant que courtier-revendeur Adhésion BD SRO Adhésion SIPC Exigences de l'état Personnes associées successeur courtier Inscription de courtier retrait de l'inscription Annulation d'inscription Futures de sécurité Conduite Règlement des courtiers-concessionnaires Dispositions antifraude Obligation d'équité Exigences de compatibilité Obligation de meilleure exécution Règle de confirmation des clients Divulgation des conditions de crédit Restrictions sur les ventes à découvert (règlement SHO) Négociation au cours d'un placement (règlement M) Restrictions aux restrictions d'opérations d'initiés sur les opérations sur valeurs mobilières Analystes et réglementation AC Négociation par les membres des bourses et courtiers Extension de crédit Règlements NMS Obligations d'exécution des ordres Règlements ATS: Systèmes de négociation des courtiers Règles sur les actions Penny Privacy of Consumer Financial Information (Regulation SP) Conseiller en placement Enregistrement Arbitrage Responsabilité financière des courtiers Négociation du capital net Utilisation des soldes clients Protection des clients Livres, Exigences en matière d'évaluation des risques Autres exigences Examens et inspections Programme de valeurs mobilières perdues et volées Exigence d'empreinte digitale Utilisation des médias électroniques par les courtiers-négociants Signatures électroniques Programme de lutte contre le blanchiment de capitaux Bureau des biens étrangers Contrôler les plans de continuité des activités Où obtenir de plus amples renseignements I. INTRODUCTION The Securities Exchange Act De 1934 (quotExchange Actquot ou quotActquot) régit la façon dont fonctionnent les marchés des valeurs mobilières de la nation et ses courtiers et courtiers. Nous avons préparé ce guide pour résumer certaines des dispositions importantes de la Loi et de ses règles. Vous trouverez des informations sur la nécessité de vous inscrire en tant que courtier et sur la façon de vous inscrire, ainsi que sur les normes de conduite et les règles de responsabilité financière que les courtiers-courtiers doivent suivre. ATTENTION mdash ASSUREZ-VOUS DE SUIVRE TOUTES LES LOIS ET RÈGLEMENTS Bien que ce guide souligne certaines dispositions de la Loi et de nos règles, il n'est pas exhaustif. Les courtiers et les courtiers et leurs personnes associées doivent se conformer à toutes les exigences applicables, y compris celles de la Securities and Exchange Commission des États-Unis (quotSECquot ou quotCommissionquot), ainsi qu'aux exigences des organismes d'autoréglementation auxquels appartiennent les courtiers et les courtiers, Et pas seulement ceux qui sont résumés ici. Le personnel de la SEC est prêt à répondre à vos questions et à vous aider à respecter nos règles. Après avoir lu ce guide, si vous avez des questions, n'hésitez pas à communiquer avec le Bureau d'interprétation et d'orientation au (202) 551-5777 (courriel tradingandmarketssec. gov) ou au bureau régional de la SEC de votre région. Vous trouverez une liste de numéros de téléphone utiles à la fin de ce guide, ou sur le site SEC39s à sec. govcontact. shtml. Vous pouvez consulter un avocat privé qui connaît bien les lois fédérales sur les valeurs mobilières afin de vous assurer que vous respectez toutes les lois et règlements en vigueur. Le personnel de la SEC ne peut pas agir comme avocat d'un particulier ou d'un courtier en valeurs mobilières. Bien que le personnel essaie de fournir des conseils par téléphone aux personnes qui font des enquêtes, les conseils sont informels et non contraignants. Des directives formelles peuvent être demandées dans le cadre d'une enquête écrite conforme aux lignes directrices de la SEC39 pour les demandes non motivées, interprétatives et exemptées. II. QUI EST OBLIGÉ DE S'INSCRIRE La plupart des quotbrokers et quotdealers doivent s'inscrire auprès de la SEC et se joindre à une organisation quotself-regulation, quot ou SRO. Cette section traite des facteurs qui déterminent si une personne est un courtier ou un courtier. Il décrit également les types de courtiers et de courtiers qui n'ont pas à s'inscrire auprès de la SEC. Les organismes d'autoréglementation sont décrits dans la partie III ci-dessous. Note sur les banques: La Loi sur les changes contient également des dispositions spéciales relatives aux activités de courtage et de négociation des banques. Veuillez consulter les sections 3a) 4) B) et 3a) 5) C) et les dispositions connexes, et consulter l'avocat. Les aspects de l'activité des négociants bancaires sont discutés dans une publication publiée par la Division de la négociation et des marchés de la SEC39, intitulée Guide de conformité des banques aux banques sur les exceptions et règles statutaires des courtiers, qui est disponible sur le site Web de SEC39 à: sec. govdivisionsmarketregbankdealerguide. htm. L'activité de courtage bancaire est traitée dans le règlement R, qui a été adopté conjointement par la Commission et le Conseil des gouverneurs du système de la Réserve fédérale. Voir la publication de la Loi n ° 56501 (24 septembre 2007) sec. govrulesfinal200734-56501.pdf. A. Qui est un détaillant? L'article 3 (a) (4) (A) de la Loi définit généralement un quotbroker comme une personne qui se livre à des opérations sur titres pour le compte d'autrui. Parfois, vous pouvez facilement déterminer si quelqu'un est un courtier. Par exemple, une personne qui exécute des transactions pour d'autres sur une bourse de valeurs est clairement un courtier. Cependant, d'autres situations sont moins claires. Par exemple, chacune des personnes et entreprises suivantes peut avoir besoin de s'inscrire comme courtier, selon un certain nombre de facteurs: quotfinders, quotbusiness brokers, quot et autres personnes ou entités qui se livrent dans les activités suivantes: Trouver des investisseurs ou des clients pour, (Ou des fonds communs de placement, y compris des fonds spéculatifs) ou d'autres intermédiaires en valeurs mobilières Trouver des clients de banques d'investissement pour des courtiers inscrits Trouver des investisseurs pour des négociants en valeurs mobilières (des entités qui émettent des titres), même dans un Y compris les placements privés Trouver des acheteurs et des vendeurs d'entreprises (c.-à-d. Des activités liées aux fusions et acquisitions où des valeurs mobilières sont impliquées) conseillers en investissement et conseillers financiers courtiers-courtiers étrangers qui ne peuvent pas compter sur des fonds de capital-risque Sur la règle 15a-6 de la Loi (voir ci-dessous) les personnes qui exploitent ou contrôlent des plates-formes électroniques ou autres pour négocier des valeurs mobilières qui investissent des intérêts immobiliers tels que les intérêts en commun, Agents pour les placements privés de valeurs mobilières qui commercialisent ou effectuent des opérations sur des produits d'assurance qui sont des valeurs mobilières telles que des rentes à capital variable ou d'autres produits de placement qui sont des valeurs mobilières qui effectuent des opérations sur titres pour le compte d'autrui moyennant des frais, Sont des amis ou des membres de la famille des personnes qui fournissent des services de soutien aux courtiers inscrits et aux personnes qui agissent en tant qu'entrepreneurs indépendants, mais qui ne sont pas des personnes associées d'un courtier-négociant (pour plus d'information sur les quotassociées, voir ci-dessous). Afin de déterminer si un de ces particuliers (ou toute autre personne ou entreprise) est un courtier, nous examinons les activités que la personne ou l'entreprise exerce effectivement. Vous pouvez trouver des analyses des diverses activités dans les décisions des tribunaux fédéraux et nos propres lettres d'inaction et d'interprétation. Voici quelques-unes des questions que vous devriez poser pour déterminer si vous agissez à titre de courtier: Participez-vous à des parties importantes d'une transaction sur titres, y compris la sollicitation, la négociation ou l'exécution de la transaction? Ou est-elle liée au résultat ou à la taille de l'opération ou de l'entente? Avez-vous reçu des commissions de suivi, telles que les frais 12b-1? Recevez-vous d'autres compensations liées aux opérations? Est-ce que vous exercez ou facilitez des titres Transactions Vous manipulez les titres ou les fonds d'autrui dans le cadre d'opérations sur titres Une réponse quotyesquot à l'une de ces questions indique que vous devrez peut-être vous inscrire en tant que courtier. B. Qui est un agent de vente? À la différence d'un courtier, qui agit en tant qu'agent, un courtier agit en tant que mandant. L'alinéa 3a) (5) (A) de la Loi définit généralement un quotdealer: toute personne qui s'occupe de l'achat et de la vente de titres pour son propre compte, par l'entremise d'un courtier ou autrement. La définition de quotdealerquot n'inclut pas un quottrader, c'est-à-dire une personne qui achète et vend des titres pour son propre compte, individuellement ou à titre fiduciaire, mais non dans le cadre d'une activité régulière. Les particuliers qui achètent et vendent des titres pour eux-mêmes sont généralement considérés comme des commerçants et non comme des courtiers. Parfois, vous pouvez facilement dire si quelqu'un est un revendeur. Par exemple, une entreprise qui annonce publiquement qu'il fait un marché des valeurs mobilières est évidemment un courtier. D'autres situations peuvent être moins claires. Par exemple, chaque personne physique ou morale peut avoir besoin de s'inscrire à titre de courtier en fonction d'un certain nombre de facteurs: une personne qui se présente comme étant disposée à acheter et à vendre un titre particulier de façon continue, D'une convention de rachat ou d'une personne qui émet ou émet des titres qu'il achète et vend. Voici quelques-unes des questions que vous devriez poser pour déterminer si vous agissez en tant que revendeur: Est-ce que vous faites de la publicité ou autrement que d'autres savent que vous êtes dans l'entreprise d'acheter et de vendre des titres Faites-vous des affaires avec le public ) Faites-vous un marché, ou de cotation des prix pour les achats et les ventes de, un ou plusieurs titres Vous participez à un groupe de quotselling ou souscrire autrement des valeurs mobilières Fournissez-vous des services aux investisseurs, Ou donner des conseils en matière de placement Vous écrivez des contrats dérivés qui sont des titres Une réponse quotyesquot à l'une de ces questions indique que vous devrez peut-être s'inscrire en tant que revendeur. C. Que faire si vous pensez être un courtier ou un courtier Si vous faites ou pouvez faire l'une des activités d'un courtier ou d'un courtier, vous devriez savoir si vous devez vous inscrire. Vous trouverez ci-dessous des renseignements sur le processus d'inscription des courtiers. Si vous n'êtes pas certain, vous voudrez peut-être consulter les interprétations de la SEC, consulter un avocat privé ou demander des conseils à la Division de la négociation et des marchés de la SEC39 en composant le (202) 551-5777 ou en envoyant un courriel à tradingandmarketssec. gov . (S'il vous plaît n'oubliez pas d'inclure votre numéro de téléphone.) Remarque: Si vous agirez comme un quotbrokerquot ou quotdealer, quot vous ne devez pas s'engager dans des affaires de valeurs mobilières jusqu'à ce que vous êtes correctement enregistré. Si vous êtes déjà engagé dans l'entreprise et ne sont pas encore inscrits, vous devriez cesser toutes les activités jusqu'à ce que vous êtes correctement enregistré. Pour de plus amples renseignements, veuillez consulter la partie II. D et la partie III ci-dessous. D. Les courtiers et les courtiers en général doivent s'inscrire auprès de la SEC L'article 15 (a) (1) de la Loi interdit généralement à tout courtier ou courtier d'utiliser les courriers (ou tout autre moyen de commerce interétatique, comme le téléphone, les télécopieurs , Ou l'Internet) afin de refléter les transactions, d'induire ou de tenter d'induire l'achat ou la vente d'une garantie, à moins que ce courtier ou courtier ne soit inscrit auprès de la Commission conformément à l'article 15 (b) de la Loi. Il ya quelques exceptions à cette règle générale que nous discuterons ci-dessous. De plus, nous discutons ci-dessous les exigences d'inscription spéciales qui s'appliquent aux courtiers en valeurs mobilières du gouvernement et des municipalités, y compris les conventions de rachat. 1. quotComposants associés d'un courtier-distributeur Nous appelons les personnes qui travaillent pour un courtier-négociant enregistré quotassociated personnes. C'est le cas si ces personnes sont des employés, des entrepreneurs indépendants, ou travaillent autrement avec un courtier-négociant. Bien que les personnes associées ne soient généralement pas obligées de s'inscrire séparément auprès de la SEC, elles doivent être dûment supervisées par un courtier agréé. Ils peuvent également avoir à s'inscrire auprès des organismes d'autoréglementation dont leur employeur est membre, par exemple, la Financial Industry Regulatory Authority, Inc. (FINRAquot) (fka Association nationale des courtiers en valeurs mobilières, Inc. (quotNASDquot)) ou Une bourse nationale de valeurs mobilières. Dans la mesure où les personnes associées exercent des activités en valeurs mobilières en dehors de la surveillance de leur courtier-négociant, elles devraient s'inscrire séparément en tant que courtiers. La partie III, ci-dessous, fournit une discussion sur la façon de s'inscrire comme courtier. Nous ne faisons pas de distinction entre les employés et les autres personnes associées aux fins du droit des valeurs mobilières. Les courtiers-courtiers doivent surveiller les activités en valeurs mobilières de leur personnel, qu'ils soient considérés comme des employés ou des «entrepreneurs indépendants» tels que définis par la loi de l'État. Voir. Par exemple, dans le cas de William V. Giordano. Loi n ° 36742 sur le droit des valeurs mobilières (19 janvier 1996). La loi ne permet pas non plus aux entités non enregistrées de percevoir des commissions au nom d'un représentant inscrit. Par exemple, les personnes associées ne peuvent pas créer une entité distincte pour recevoir les chèques de commission. Une entité non enregistrée qui reçoit des revenus de commissions dans cette situation doit s'inscrire comme courtier. Voir. Par exemple, Wolff Juall Investments, LLC (le 17 mai 2005). Dans certaines circonstances, les entités non enregistrées peuvent s'engager dans des services d'administration de la paye impliquant des courtiers. Voir. Par exemple, lettre re: ADP TotalSource, Inc. (4 décembre 2007). Dans ces circonstances, l'employeur du courtier embauche généralement et supervise tous les aspects du travail des employés39 et utilise l'administrateur de la paie et des avantages uniquement comme un moyen de centraliser les services du personnel. 2. Les courtiers-courtiers intra-État Un courtier-courtier qui conduit toutes ses affaires dans un état n'a pas à s'inscrire auprès de la SEC. (L'enregistrement d'État est une autre affaire, voir la partie III ci-dessous.) L'exception prévue pour l'activité de courtage interétatique est très étroite. Pour être admissible, tous les aspects de toutes les transactions doivent être effectués à l'intérieur des frontières d'un État. Cela signifie que, sans l'enregistrement SEC, un courtier-négociant ne peut participer à aucune transaction exécutée sur une bourse nationale de valeurs mobilières. Un courtier-négociant qui satisfait par ailleurs aux exigences de l'exonération de courtier interétatique ne cesserait pas d'être admissible à l'exemption de courtier intra-État uniquement parce qu'il a un site Web qui peut être consulté par des personnes hors de l'État, Courtier prend des mesures raisonnablement conçues pour s'assurer que son entreprise reste exclusivement intra-État. Ces mesures pourraient inclure l'utilisation de renonciations indiquant clairement que l'activité des courtiers est exclusivement intra-étatique et que le courtier-négociant ne peut agir pour ou avec, et fournir des services de courtier-courtier à une personne dans son état, Le courtier en valeurs mobilières ne fournit pas de services de courtage à des personnes qui indiquent qu'elles sont ou que le courtier-négociant a des raisons de croire qu'elles ne se trouvent pas dans l'état de résidence des courtiers. Ces mesures ne sont pas destinées à être exclusives. Un courtier peut adopter d'autres mesures raisonnablement conçues pour s'assurer qu'elle ne fournit pas de services de courtier à des personnes qui ne sont pas dans le même état que le courtier. Toutefois, une entreprise d'intermédiaires ne serait pas exclusivement intra-étatique si elle vendait des titres ou fournissait tout autre service de courtier à une personne qui indique qu'elle est ou que le courtier-négociant a des raisons de croire qu'elle ne se trouve pas dans l'état des courtiers De résidence. Pour plus d'informations sur l'utilisation d'Internet par les courtiers inter-états, voir sec. govrulesfinal201633-10238.pdf. Un mot sur les titres municipaux et gouvernementaux. Il n'y a pas d'exception intra-État à l'inscription pour les courtiers en valeurs mobilières municipaux ou les courtiers et courtiers en valeurs mobilières du gouvernement. 3. Les courtiers-courtiers qui limitent leurs activités aux titres exclus et exonérés Un courtier-négociant qui traite des affaires uniquement dans des effets de commerce, des acceptations bancaires et des bons commerciaux n'a pas besoin de s'inscrire auprès de la SEC en vertu de l'alinéa 15b) De la Loi. En revanche, les personnes qui exercent des activités commerciales uniquement dans certains titres soumis à une offre de cotation, au sens de l'alinéa 3a) 12) de la Loi, n'ont pas à s'enregistrer en vertu de l'alinéa 15b) De la Loi. Par exemple, certains courtiers en valeurs mobilières de l'État, qui sont des valeurs soumises à la citation, doivent s'inscrire en tant que courtiers en valeurs mobilières ou courtiers en vertu de l'article 15C de la Loi, tel qu'il est décrit ci-dessous à la partie II. E. 4. Les courtiers-négociants doivent s'inscrire avant de vendre des titres non enregistrés, y compris les placements privés (ou les offres de règlement D) Un titre vendu dans une transaction qui est exemptée de l'enregistrement en vertu de la Securities Act de 1933 (la Loi de 1933) n'est pas nécessairement une La Loi sur les changes. Par exemple, une personne qui vend des titres qui sont exemptés de l'enregistrement en vertu de la règle D de la Loi de 1933 doit néanmoins s'inscrire comme courtier. En d'autres termes, les agents de placement ne sont pas exemptés de l'inscription des courtiers. 5. Obligations des émetteurs et des personnes associées des émetteurs (règle 3a4-1) Les émetteurs ne sont généralement pas des quotbrokers parce qu'ils vendent des titres pour leurs propres comptes et non pour les comptes de tiers. En outre, les émetteurs ne sont généralement pas des quotdealersquot parce qu'ils n'achètent pas et ne vendent leurs titres pour leurs propres comptes dans le cadre d'une entreprise régulière. Toutefois, les émetteurs dont les activités vont au-delà de la vente de leurs propres titres doivent déterminer s'ils devront s'inscrire comme courtiers. Cela comprend les émetteurs qui achètent leurs titres auprès d'investisseurs, ainsi que les émetteurs qui exploitent efficacement les marchés sur leurs propres titres ou dans des titres dont les caractéristiques ou les modalités peuvent changer ou être modifiées. L'exonération dite de l'émetteur ne s'applique pas au personnel d'une société qui s'occupe habituellement d'effectuer des opérations sur titres pour la société ou des sociétés liées (comme les commandités qui recherchent des investisseurs dans des sociétés en commandite). Les employés et autres personnes apparentées d'un émetteur qui aident à vendre ses titres peuvent être des quotbrokers, surtout si elles sont payées pour la vente de ces titres et ont peu d'autres fonctions. La Loi sur les bourses La Règle 3a4-1 prévoit qu'une personne (ou un employé) associée d'un émetteur qui participe à la vente des titres de l'émetteur ne devrait pas s'inscrire à titre de courtier si cette personne, au moment de la participation: 1) N'est pas assujettie à une disqualification quotstatutory, telle que définie à l'article 3 a) (39) de la Loi (2) n'est pas compensée par le paiement de commissions ou toute autre rémunération basée directement ou indirectement sur les opérations sur titres (3) n'est pas associée La personne d'un courtier ou d'un courtier et (4) limite ses activités de vente conformément à la règle. Certains émetteurs offrent des programmes de réinvestissement de dividendes et d'achat d'actions. Sous certaines conditions, un émetteur peut acheter et vendre ses propres titres par le biais d'un programme de réinvestissement de dividendes ou d'achat d'actions sans s'inscrire comme courtier. Ces conditions concernant la sollicitation, les honoraires et les frais et la gestion des fonds et des titres des participants sont expliquées dans la publication de la Loi sur les valeurs mobilières n o 35041 (1er décembre 1994), 59 FR 63393 (quot1994, lettre STA). Bien que le Règlement M 2 ait remplacé la Règle 10b-6 et remplacé la Lettre STA de 1994, les positions de personnel prises dans cette lettre concernant l'application de l'article 15 (a) de la Loi sur les Bourses demeurent en vigueur. Voir 17 CFR 242.102 (c) et la Loi sur la Bourse des valeurs mobilières, no 38067 (20 décembre 1996), 62 FR 520, 532 n.100 (3 janvier 1997). 6. Exonération des courtiers étrangers (règle 15a-6) La SEC utilise généralement une approche territoriale pour appliquer les exigences d'enregistrement aux opérations internationales des courtiers-courtiers. Selon cette approche, tous les courtiers qui opèrent physiquement aux États-Unis et qui incitent ou tentent d'induire des opérations sur titres doivent s'inscrire auprès de la SEC, même si leurs activités visent uniquement des investisseurs étrangers en dehors des États-Unis. En outre, les courtiers étrangers qui, de l'extérieur des États-Unis, induisent ou tentent d'induire des opérations sur titres par toute personne aux États-Unis, ou qui utilisent les moyens ou les instruments du commerce interétatique des États-Unis à cette fin, Doit s'inscrire. Cela comprend l'utilisation d'Internet pour offrir des titres, solliciter des opérations sur titres ou annoncer des services d'investissement à des personnes américaines. Voir la Loi n ° 39779 (23 mars 1998) sur la Securities Exchange Act sec. govrulesinterp33-7516.htm. Toutefois, les courtiers étrangers qui limitent leurs activités à celles autorisées par la Règle 15a-6 de la Loi peuvent être exemptés de l'inscription des courtiers aux États-Unis. Les courtiers étrangers qui souhaitent se prévaloir de cette exemption devraient examiner la publication de la Loi sur les valeurs mobilières n o 27017 (en vigueur le 15 août 1989), 54 FR 30013, pour déterminer s'ils remplissent les conditions de la règle 15a-6. Voir aussi les lettres concernant les activités en valeurs mobilières des courtiers étrangers affiliés aux États-Unis (9 avril et 28 avril 1997). En outre, en avril 2005, le personnel de la Division de la réglementation des marchés a répondu aux questions fréquemment posées concernant la règle 15a-6 en ce qui concerne le règlement AC. Voir sec. govdivisionsmarketregmregacfaq0803.htmpartb. E. Exigences relatives aux courtiers et négociants en valeurs mobilières du gouvernement et des municipalités, y compris les conventions de rachat Les courtiers qui limitent leur activité à des titres publics ou municipaux exigent un enregistrement spécialisé. Ceux qui limitent leur activité à des titres d'État n'ont pas à s'inscrire en tant que courtiers-négociateurs quotgeneral-purposequot en vertu de l'article 15 (b) de la Loi. Toutefois, les courtiers généraux qui dirigent une entreprise de titres d'État doivent noter cette activité sur leur formulaire BD. (Le formulaire BD est discuté ci-dessous.) Toutes les entreprises qui sont des courtiers ou des courtiers en valeurs mobilières d'État doivent se conformer aux règles adoptées par le Secrétaire du Trésor, ainsi que les règles de la SEC. Les sociétés qui limitent leur activité en valeurs mobilières à l'achat et à la vente de titres municipaux pour leur propre compte (courtiers en valeurs mobilières municipaux) doivent s'inscrire à titre de courtiers en valeurs mobilières à vocation générale. Toutefois, si ces entités sont des banques ou si elles répondent aux exigences de l'exemption intra-État mentionnées à la partie II. D.2. Dessus, ils doivent s'inscrire en tant que courtiers en valeurs mobilières municipaux. Les courtiers en valeurs mobilières municipaux (autres que les banques) doivent s'inscrire à titre de courtiers-courtiers à des fins générales à moins qu'ils ne soient admissibles à l'exception intra-État. Voir la partie II. D.2 ci-dessus. Les entreprises qui exécutent un livre assorti de conventions de rachat ou d'autres prêts-actions sont considérées comme des concessionnaires. Parce qu'un commerçant de livre quotbook se considère comme disposé à acheter et à vendre des valeurs mobilières et s'occupe donc de l'achat et de la vente de titres, il doit s'inscrire comme courtier. F. Règles spéciales s'appliquant aux banques et aux institutions financières similaires Remarque: Les banques, les caisses d'épargne et autres institutions financières doivent savoir que la Commission a adopté des règles qui peuvent les affecter. Voir le Règlement R, Loi n ° 34-56501 (24 septembre 2007), 72 FR 56514 (3 octobre 2007), sec. govrulesfinal200734-56501.pdf et Loi n ° 34-56502 ( 24 septembre 2007) 72 FR 56562 (3 octobre 2007), sec. govrulesfinal200734-56502.pdf. Banques. Avant la promulgation de la loi de 1999, les banques américaines étaient exemptées des définitions de quotbroker et quotdealerquot en vertu de la Loi. Le GLBA a modifié la Loi sur les changes et les banques ont maintenant certaines exceptions ciblées et exemptions de l'enregistrement des courtiers. À l'heure actuelle, à la suite de la réglementation de la Commission, les banques sont en phase de transition pour se conformer à la nouvelle loi. Depuis le 1er octobre 2003, les banques qui achètent et vendent des titres doivent se demander si elles sont des quotdealersquot en vertu des lois fédérales sur les valeurs mobilières. La Division de la négociation et des marchés a publié un guide spécial de conformité pour les banques, intitulé Guide de conformité des banques aux banques sur les exceptions et règles statutaires des courtiers, qui est disponible sur le site Web de SEC39 à: sec. govdivisionsmarketregbankdealerguide. htm. L'activité de courtage bancaire est traitée dans le règlement R, qui a été adopté conjointement par la Commission et le Conseil des gouverneurs du système de la Réserve fédérale. Voir la publication de la Loi n ° 56501 (24 septembre 2007) (qui peut être consultée à sec. govrulesfinal200734-56501.pdf). Les exceptions et exemptions bancaires ne s'appliquent qu'aux banques, et non aux entités liées. Il est important de noter que les exceptions applicables aux banques en vertu de la Loi sur les bourses, telle que modifiée par le GLBA, ne sont pas applicables à d'autres entités, y compris les filiales bancaires et les sociétés affiliées, qui ne sont pas elles-mêmes des banques. À ce titre, les filiales et les sociétés affiliées de banques qui exercent des activités de courtier sont tenues de s'inscrire en tant que courtiers en vertu de la Loi. De plus, les banques qui agissent à titre de courtiers en valeurs mobilières municipaux ou comme courtiers ou courtiers en valeurs mobilières du gouvernement continuent d'être tenues de s'inscrire en vertu de la Loi. Thrifts. Par statut, les épargnants (associations d'épargne) ont le même statut que les banques et peuvent se prévaloir des mêmes exceptions ciblées et des exemptions de l'inscription des courtiers en tant que banques. Comme pour les banques, il est important de noter que les exceptions et exemptions applicables aux épargnants ne sont pas applicables à d'autres entités, y compris les filiales et les filiales, Affiliés qui ne sont pas thrifts. À ce titre, les filiales et les sociétés affiliées d'épargnants qui exercent des activités de courtier sont tenues de s'inscrire à titre de courtiers en vertu de la Loi. Les coopératives de crédit et les institutions financières. Les exceptions et exemptions applicables aux banques en vertu de la Loi sur les changes ne s'appliquent pas à d'autres types d'institutions financières, comme les coopératives de crédit. Le personnel de la SEC a toutefois permis à certaines institutions financières, comme les coopératives de crédit, de mettre des titres à la disposition de leurs clients sans s'inscrire en tant que courtiers. Cela se fait par le biais d'ententes de réseautage, où un courtier affilié ou tiers fournit des services de courtage pour les clients de l'institution financière, selon les conditions énoncées dans les lettres de non-action et la règle 2350 de la NASD. Les commissions générées par leurs clients référencés, sous certaines conditions. L'institution financière qui s'occupe de ce réseau doit se conformer strictement au droit applicable et aux directives du personnel de la Commission. Voir. Par exemple, la lettre relative à Chubb Securities Corporation (24 novembre 1993) et la règle 2350 de la NASD (applicable aux courtiers qui concluent des ententes de mise en réseau avec des banques, des caisses d'épargne et des coopératives d'épargne et de crédit). G. Agence d'assurance Réseautage Le personnel de la SEC a permis aux organismes d'assurance de faire des produits d'assurance qui sont également des titres (tels que des rentes variables) à la disposition de leurs clients sans s'inscrire comme courtiers en vertu de certaines conditions. Cela se fait encore par le biais d'ententes de réseautage, où un courtier affilié ou tiers fournit des services de courtage pour les clients de l'agence d'assurance, selon les conditions énoncées dans les lettres de non-action. Ces dispositions visent à remédier aux difficultés des lois fédérales et mixtes applicables à la vente de ces produits. Grâce à des arrangements de réseautage, les agences d'assurance peuvent partager les commissions générées par leurs clients référencés sous certaines conditions. Les organismes d'assurance qui s'engagent dans ce réseau doivent se conformer strictement à la loi applicable et aux directives du personnel de la Commission. Les compagnies d'assurance doivent consulter la lettre suivante: First of America Brokerage Services, Inc. (28 septembre 1995). Les personnes intéressées à structurer un tel arrangement devraient communiquer avec un avocat privé ou le personnel de la SEC pour obtenir de plus amples renseignements. Notamment, les arrangements de réseau d'assurance sont limités aux produits d'assurance qui sont également des valeurs mobilières. Ils ne comprennent pas les ventes de fonds communs de placement et d'autres titres qui ne présentent pas les mêmes difficultés de réglementation. Voir lettre re: Lincoln Financial Advisors Corp. (le 20 février 1998). H. Titres immobiliers et courtiers immobiliersAgents L'offre de biens immobiliers en tant que tels, sans aucun arrangement de garantie avec le vendeur ou d'autres, n'implique pas l'offre d'un titre. Lorsque l'immobilier est offert en conjonction avec certains services, cependant, il peut constituer un contrat d'investissement, et donc, un titre. Voir en général. Loi n ° 5347 (4 janvier 1973) sur les valeurs mobilières (donnant des lignes directrices sur l'applicabilité des lois fédérales sur les valeurs mobilières aux offres et aux ventes de copropriétés ou d'unités dans le cadre d'un développement immobilier). Il n'existe pas d'exception générale à l'égard des exigences d'inscription des courtiers pour les courtiers immobiliers ou les agents autorisés qui se livrent à des opérations sur des titres immobiliers. Dans le passé, le personnel de la Division a accordé un dégrèvement sans effet aux exigences d'inscription au personnel immobilier agréé qui exerce des activités limitées dans le cadre de la vente d'unités en copropriété couplée à une offre ou à une entente visant à assurer certains services de location ou autres Pour l'acheteur. L'allégement prévu dans ces lettres est limité uniquement à leurs faits et ne devrait pas être invoqué pour des activités liées à la vente d'autres types de titres immobiliers, y compris les locataires-dans-intérêts communs dans l'immobilier. Voir en général. NASD Avis aux membres 05-18, finra. orgsitesdefaultfilesNoticeDocumentp013455.pdf (s'adressant aux locataires-dans-intérêts communs dans l'immobilier). I. Broker-Dealer Relationships with Affinity Groups Broker-dealers may enter into arrangements to offer services to members of certain non-profit groups, including civic organizations, charities, and educational institutions that rely upon private donations. These arrangements are subject to certain conditions to ensure that the organizations, or quotaffinity groups, quot do not develop a salesman39s stake with respect to the sale of securities. See . for example, letter re: Attkisson, Carter amp Akers (June 23, 1998). III. HOW TO REGISTER AS A BROKER-DEALER A broker-dealer may not begin business until: it has properly filed Form BD, and the SEC has granted its registration it has become a member of an SRO it has become a member of SIPC, the Securities Investor Protection Corporation it complies with all applicable state requirements and its quotassociated personsquot have satisfied applicable qualification requirements. A. Form BD If a broker-dealer does not qualify for any of the exceptions or exemptions outlined in the sections above, it must register with the Commission under Section 15(b) of the Act. Broker-dealers register by filing an application on Form BD, which you may obtain from the SEC39s webpage at sec. govaboutformsformbd. pdf or through the SEC39s Publications Office at (202) 551-4040. You also use Form BD to: apply for membership in an SRO, such as FINRA or a registered national securities exchange give notice that you conduct government securities activities or apply for broker-dealer registration with each state in which you plan to do business. Form BD asks questions about the background of the broker-dealer and its principals, controlling persons, and employees. The broker-dealer must meet the statutory requirements to engage in a business that involves high professional standards, and quite often includes the more rigorous responsibilities of a fiduciary. To apply for registration, you must file one executed copy of Form BD through the Central Registration Depository (quotCRDquot), which is operated by FINRA. (The only exception is for banks registering as municipal securities dealers, which file Form MSD directly with the SEC and with their appropriate banking regulator.) Form BD contains additional filing instructions. The SEC does not charge a filing fee, but the SROs and the states may. Applicants that reside outside the U. S. must also appoint the SEC as agent for service of process using a standard form. Incomplete applications are not considered quotfiledquot and will be returned to the applicant for completion and re-submission. Within 45 days of filing a completed application, the SEC will either grant registration or begin proceedings to determine whether it should deny registration. An SEC registration may be granted with the condition that SRO membership must be obtained. The SROs have independent membership application procedures and are not required to act within 45 days of the filing of a completed application. In addition, state registrations may be required. A broker-dealer must comply with relevant state law as well as federal law and applicable SRO rules. Timeframes for registration with individual states may differ from the federal and SRO timeframes. As such, when deciding to register as a broker-dealer, it is important to plan for the time required for processing Federal, state, and SRO registration or membership applications. Duty to update Form BD. A registered broker-dealer must keep its Form BD current. Thus, it must promptly update its Form BD by filing amendments whenever the information on file becomes inaccurate or incomplete for any reason. Prohibited Broker-Dealer Names. Title 18, Section 709 of the United States Code makes it a criminal offense to use the words quotNational, quot quotFederal, quot quotUnited States, quot quotReserve, quot or quotDeposit Insurancequot in the name of a person or organization in the brokerage business, unless otherwise allowed by federal law. Further, a broker-dealer name that is otherwise materially misleading would become subject to scrutiny under Exchange Act Section 10(b), and Rule 10b-5 thereunder, the general antifraud rules, and any other applicable provisions. B. SRO Membership (Section 15(b)(8) and Rule 15b9-1) Before it begins doing business, a broker-dealer must become a member of an SRO. SROs assist the SEC in regulating the activities of broker-dealers. FINRA and the national securities exchanges are all SROs. If a broker-dealer restricts its transactions to the national securities exchanges of which it is a member and meets certain other conditions, it may be required only to be a member of those exchanges. If a broker-dealer effects securities transactions other than on a national securities exchange of which it is a member, however, including any over-the-counter business, it must become a member of FINRA, unless it qualifies for the exemption in Rule 15b9-1. FINRA39s webpage at finra. org provides detailed information on the FINRA membership process. You may also wish to consult the web pages of the individual exchanges for additional information. Firms that engage in transactions in municipal securities must also comply with the rules of the Municipal Securities Rulemaking Board, or MSRB. The MSRB is an SRO that makes rules governing transactions in municipal securities, but, unlike other SROs, it does not enforce compliance with its rules. Compliance with MSRB rules is monitored and enforced by FINRA and the SEC (in the case of broker-dealers), and the Federal bank regulators and the SEC (in the case of banks). You may wish to consult the MSRB39s website at msrb. org for additional information, or you can call the MSRB at (703) 797-6600. C. SIPC Membership Every registered broker-dealer must be a member of the Securities Investor Protection Corporation, or SIPC, unless its principal business is conducted outside of the United States or consists exclusively of the sale or distribution of investment company shares, variable annuities, or insurance. Each SIPC member must pay an annual fee to SIPC. SIPC insures that its members39 customers receive back their cash and securities in the event of a member39s liquidation, up to 500,000 per customer for cash and securities. (Claims for cash are limited to 100,000.) For further information, contact SIPC, 805 15th St. NW, Suite 800, Washington, DC 20005. Telephone: (202) 371-8300, fax: (202) 371-6728, or visit SIPC39s website at sipc. org . D. State Requirements Every state has its own requirements for a person conducting business as a broker-dealer within that state. Each state39s securities regulator can provide you with information about that state39s requirements. You can obtain contact information for these regulators from the North American Securities Administrators Association, Inc. (NASAA), 750 First Street, NE, Suite 1140, Washington, DC 20002. Telephone: (202) 737-0900, or visit NASAA39s website at nasaa. org . E. Associated Persons (Section 3(a)(18) Rule 15b7-1) The Act defines an quotassociated personquot of a broker-dealer as any partner, officer, director, branch manager, or employee of the broker-dealer, any person performing similar functions, or any person controlling, controlled by, or under common control with, the broker-dealer. A broker-dealer must file a Form U-4 with the applicable SRO for each associated person who will effect transactions in securities when that person is hired or otherwise becomes associated. Form U-4 is used to register individuals and to record these individuals39 prior employment and disciplinary history. An associated person who effects or is involved in effecting securities transactions also must meet qualification requirements. These include passing an SRO securities qualification examination. Many individuals take the comprehensive quotSeries 7quot exam. If individuals engage only in activities involving sales of particular types of securities, such as municipal securities, direct participation programs (limited partnerships) or mutual funds, they may wish to take a specialized examination focused on that type of security, instead of the general securities examination. There is also a special exam for assistant representatives, whose activities are limited to accepting unsolicited customer orders for execution by the firm. Supervisory personnel, and those who engage in specialized activities such as options trading, must take additional exams that cover those areas. These examinations require the Series 7 exam as a prerequisite. You can obtain copies of Form U-4, as well as information on securities qualification examinations, from an SRO. FINRA39s website at finra. org contains detailed information and guidance for individuals who wish to obtain a series license through FINRA. Also note that individual states have their own licensing and registration requirements, so you should consult with the applicable state securities regulators for further information. Note: If you hold a series license, you must be properly associated with a registered broker-dealer to effect securities transactions. It is not sufficient merely to hold a series license when engaging in securities business. If you hold a series license and wish to start an independent securities business, or otherwise wish to effect securities transactions outside of an quotassociated personquot relationship, you would first need to register as a broker-dealer. F. Successor Broker-Dealer Registration (Rules 15b1-3, 15Ba2-4, and 15Ca2-3) A successor broker-dealer assumes substantially all of the assets and liabilities, and continues the business, of a registered predecessor broker-dealer. A successor broker-dealer must file a new Form BD (or, in special instances, amend the predecessor broker-dealer39s Form BD) within 30 days after such succession. The filing should indicate that the applicant is a successor. See Securities Exchange Act Release No. 31661 (December 28, 1992), 58 FR 7, which is available on the SEC39s website at: sec. govrulesinterp199234-31661.pdf. See also, the instructions to Form BD . G. Withdrawal from Registration (Rule 15b6-1) Cancellation of Registration When a registered broker-dealer stops doing business, it must file a Form BDW (sec. govaboutformsformbdw. pdf ) to withdraw its registration with the SEC and with the states and SROs of which it is a member. This form requires the broker-dealer to disclose the amount of any funds or securities it owes customers, and whether it is the subject of any proceedings, unsatisfied judgments, liens, or customer claims. These disclosures help to ensure that a broker-dealer39s business is concluded in an orderly manner and that customers39 funds and securities are protected. In most cases, a broker-dealer must also file a final FOCUS report. Form BDW may also be used by a broker-dealer to withdraw from membership with particular SROs, or to withdraw from registration with particular states, without withdrawing all of its registrations and memberships. Form BDW is not considered quotfiledquot unless it is deemed complete by the SEC and the SRO that reviews the filing. The SEC may also cancel a broker-dealer39s registration if it finds that the firm is no longer in existence or has ceased doing business as a broker-dealer. IV. SECURITY FUTURES Security futures, which are contracts of sale for future delivery of a single security or a narrow-based security index, are regulated as both securities by the SEC and as futures by the Commodity Futures Trading Commission (quotCFTCquot). As a result, firms that conduct business in security futures must be registered with both the SEC and the CFTC. Federal law permits firms already registered with either the SEC or the CFTC to register with the other agency, for the limited purpose of trading security futures, by filing a notice. Specifically, firms registered as general purpose broker-dealers under Section 15(b) of the Act may quotnoticequot register with the CFTC. Likewise, futures commission merchants and introducing brokers registered with the CFTC may notice register with the SEC. (Section 15(b)(12) of the Act provides a limited exception to this notice registration requirement for certain natural persons who are members of security futures exchanges). However, futures commission merchants or introducing brokers that conduct a business in securities other than security futures must be registered as general-purpose broker-dealers. For more information on this topic, See Exchange Act Release No. 44730 (effective August 27, 2001), 66 FR 45138, and 66 FR 43080 (effective September 17, 2001). V. CONDUCT REGULATION OF BROKER-DEALERS Broker-dealers, like other securities market participants, must comply with the general quotantifraudquot provisions of the federal securities laws. Broker-dealers must also comply with many requirements that are designed to maintain high industry standards. We discuss some of these provisions below. A. Antifraud Provisions (Sections 9(a), 10(b), and 15(c)(1) and (2)) The quotantifraudquot provisions prohibit misstatements or misleading omissions of material facts, and fraudulent or manipulative acts and practices, in connection with the purchase or sale of securities. 3 While these provisions are very broad, the Commission has adopted rules, issued interpretations, and brought enforcement actions that define some of the activities we consider manipulative, deceptive, fraudulent, or otherwise unlawful. 4 Broker-dealers must conduct their activities so as to avoid these kinds of practices. 1. Duty of Fair Dealing Broker-dealers owe their customers a duty of fair dealing. This fundamental duty derives from the Act39s antifraud provisions mentioned above. Under the so-called quotshinglequot theory, by virtue of engaging in the brokerage profession ( e. g. . hanging out the broker-dealer39s business sign, or quotshinglequot), a broker-dealer represents to its customers that it will deal fairly with them, consistent with the standards of the profession. Based on this important representation, the SEC, through interpretive statements and enforcement actions, and the courts, through case law, have set forth over time certain duties for broker-dealers. These include the duties to execute orders promptly, disclose certain material information ( i. e. . information the customer would consider important as an investor), charge prices reasonably related to the prevailing market, and fully disclose any conflict of interest. SRO rules also reflect the importance of fair dealing. For example, FINRA members must comply with NASD39s Rules of Fair Practice. These rules generally require broker-dealers to observe high standards of commercial honor and just and equitable principles of trade in conducting their business. The exchanges and the MSRB have similar rules. 2. Suitability Requirements Broker-dealers generally have an obligation to recommend only those specific investments or overall investment strategies that are suitable for their customers. The concept of suitability appears in specific SRO rules such as NASD Rule 2310 and has been interpreted as an obligation under the antifraud provisions of the federal securities laws. Under suitability requirements, a broker-dealer must have an quotadequate and reasonable basisquot for any recommendation that it makes. Reasonable basis suitability, or the reasonable basis test, relates to the particular security or strategy recommended. Therefore, the broker-dealer has an obligation to investigate and obtain adequate information about the security it is recommending. A broker-dealer also has an obligation to determine customer-specific suitability. In particular, a broker-dealer must make recommendations based on a customer39s financial situation, needs, and other security holdings. This requirement has been construed to impose a duty of inquiry on broker-dealers to obtain relevant information from customers relating to their financial situations and to keep such information current. SROs consider recommendations to be unsuitable when they are inconsistent with the customer39s investment objectives. 3. Duty of Best Execution The duty of best execution, which also stems from the Act39s antifraud provisions, requires a broker-dealer to seek to obtain the most favorable terms available under the circumstances for its customer orders. This applies whether the broker-dealer is acting as agent or as principal. The SRO rules also include a duty of best execution. For example, FINRA members must use quotreasonable diligencequot to determine the best market for a security and buy or sell the security in that market, so that the price to the customer is as favorable as possible under prevailing market conditions. 4. Customer Confirmation Rule (Rule 10b-10 and MSRB rule G-15) A broker-dealer must provide its customers, at or before the completion of a transaction, with certain information, including: the date, time, identity, price, and number of shares involved its capacity (agent or principal) and its compensation (for agency trades, compensation includes its commission and whether it receives payment for order flow 5 and for principal trades, mark-up disclosure may be required) the source and amount of any third party remuneration it has received or will receive 6 other information, both general (such as, if the broker-dealer is not a SIPC member) and transaction-specific (such as the yield, in most transactions involving debt securities). A broker-dealer may also be obligated under the antifraud provisions of the Act to disclose additional information to the customer at the time of his or her investment decision. 5. Disclosure of Credit Terms (Rule 10b-16) Broker-dealers must notify customers purchasing securities on credit about the credit terms and the status of their accounts. A broker-dealer must establish procedures for disclosing this information before it extends credit to a customer for the purchase of securities. A broker-dealer must give the customer this information at the time the account is opened, and must also provide credit customers with account statements at least quarterly. 6. Restrictions on Short Sales (Regulation SHO) A quotshort salequot is generally a sale of a security that the seller doesn39t own or for which the seller delivers borrowed shares. Regulation SHO was adopted in 2004 to update short sale regulation in light of numerous market developments since short sale regulation was first adopted in 1938. Compliance with Regulation SHO began on January 3, 2005. Some of the goals of Regulation SHO include: Establishing uniform quotlocatequot and quotclose-outquot requirements in order to address problems associated with failures to deliver, including potentially abusive quotnakedquot short selling. Locate Requirement: Regulation SHO requires a broker-dealer to have reasonable grounds to believe that the security can be borrowed so that it can be delivered on the date delivery is due before effecting a short sale order in any equity security. This quotlocatequot must be made and documented prior to effecting the short sale. Market makers engaged in bona fide market making are exempted from the quotlocatequot requirement. quotClose-outquot Requirement: Regulation SHO imposes additional delivery requirements on broker-dealers for securities in which there are a relatively substantial number of extended delivery failures at a registered clearing agency (quotthreshold securitiesquot). For instance, with limited exception, Regulation SHO requires brokers and dealers that are participants of a registered clearing agency to take action to quotclose-outquot failure-to-deliver positions (quotopen failsquot) in threshold securities that have persisted for 13 consecutive settlement days. Closing out requires the broker or dealer to purchase securities of like kind and quantity. Until the position is closed out, the broker or dealer and any broker or dealer for which it clears transactions (for example, an introducing broker) may not effect further short sales in that threshold security without borrowing or entering into a bona fide agreement to borrow the security (known as the quotpre-borrowingquot requirement). Creating uniform order marking requirements for sales of all equity securities. This means that a broker-dealer must mark orders as quotlongquot or quotshort. quot For further information, please see the adopting release for Regulation SHO, as well as Frequently Asked Questions, Key Points, and other related materials at sec. govspotlightshortsales. htm . 7. Trading During an Offering (Regulation M) Regulation M is designed to protect the integrity of the securities trading market as an independent pricing mechanism by governing the activities of underwriters, issuers, selling security holders, and other participants in connection with a securities offering. These rules are aimed at preventing persons having an interest in an offering from influencing the market price for the offered security in order to facilitate a distribution. The adopting release for Regulation M is available at sec. govrulesfinal34-38067.txt . Rule 101 of Regulation M generally prohibits underwriters, broker-dealers and other distribution participants from bidding for, purchasing, or attempting to induce any person to bid for or purchase, any security which is the subject of a distribution until the applicable restricted period has ended. An offering39s quotrestricted periodquot begins either one or five business days (depending on the trading volume value of the offered security and the public float value of the issuer) before the day of the offering39s pricing and ends upon completion of the distribution. Rule 101 contains various exceptions that are designed to permit an orderly distribution of securities and limit disruption in the market for the securities being distributed. For example, underwriters can continue to trade in actively-traded securities of larger issuers (securities with an average daily trading volume, or ADTV, value of 1 million or more and whose issuers have a public float value of at least 150 million). In addition, the following activities, among others, may be excepted from Rule 101, if they meet specified conditions: disseminating research reports making unsolicited purchases purchasing a group, or quotbasketquot of 20 or more securities exercising options, warrants, rights, and convertible securities effecting transactions that total less than 2 of the security39s ADTV and effecting transactions in securities sold to quotqualified institutional buyers. quot Rule 102 of Regulation M prohibits issuers, selling security holders, and their affiliated purchasers from bidding for, purchasing, or attempting to induce any person to bid for or purchase, any security which is the subject of a distribution until after the applicable restricted period. Rule 103 of Regulation M governs passive market making by broker-dealers participating in an offering of a Nasdaq security. Rule 104 of Regulation M governs stabilization transactions, syndicate short covering activity, and penalty bids. Rule 105 of Regulation M prevents manipulative short sales prior to pricing an offering by prohibiting the purchase of offering securities if a person sold short the security that is the subject of the offering during the Rule 105 restricted period. The rule contains exceptions for bona fide purchases, separate accounts, and investment companies. For frequently asked questions about Regulation M, see Staff Legal Bulletin No. 9 at sec. govinterpslegalmrslb9.htm . 8. Restrictions on Insider Trading The SEC and the courts interpret Section 10(b) and Rule 10b-5 under the Act to bar the use by any person of material non-public information in the purchase or sale of securities, whenever that use violates a duty of trust and confidence owed to a third party. Section 15(f) of the Act specifically requires broker-dealers to have and enforce written policies and procedures reasonably designed to prevent their employees from misusing material non-public information. Because employees in the investment banking operations of broker-dealers frequently have access to material non-public information, firms need to create procedures designed to limit the flow of this information so that their employees cannot use the information in the trading of securities. Broker-dealers can use these information barriers as a defense to a claim of insider trading. Such procedures typically include: training to make employees aware of these restrictions employee trading restrictions physical barriers isolation of certain departments and limitations on investment bank proprietary trading. 7 9. Restrictions on Private Securities Transactions NASD Rule 3040 provides that quotno person associated with a member shall participate in any manner in a private securities transactionquot except in accordance with the provisions of the rule. To the extent that any such transactions are permitted under the rule, prior to participating in any private securities transaction, the associated person must provide written notice to the member firm as described in the rule. If compensation is involved, the member firm must approve or disapprove the proposed transaction, record it in its books and records, and supervise the transaction as if it were executed on behalf of the member firm. Other conditions may also apply. In addition, private securities transactions of an associated person may be subject to an analysis under Exchange Act Section 10(b) and Rule 10b-5, as well as the broker-dealer supervisory provisions of Section 15(f) (described in Part V. A.8, above) and Section 15(b)(4)(E), and other relevant statutory or regulatory provisions. B. Analysts and Regulation AC Regulation AC (or Regulation Analyst Certification) requires brokers, dealers, and persons associated with brokers or dealers that publish, distribute, or circulate research reports to include in those reports a certification that the views expressed in the report accurately reflect the analyst39s personal views. The report must also disclose whether the analyst received compensation for the views expressed in the report. If the analyst has received related compensation, the broker, dealer, or associated person must disclose its amount, source, and purpose. Regulation AC applies to all brokers and dealers, as well as to those persons associated with a broker or dealer that fall within the definition of quotcovered person. quot Regulation AC also requires that broker-dealers keep records of analyst certifications relating to public appearances. In addition to Commission rules, analyst conduct is governed by SRO rules, such as NASD Rule 2711 and NYSE Rule 472. The SRO rules impose restrictions on analyst compensation, personal trading activities, and involvement in investment banking activities. The SRO rules also include disclosure requirements for research reports and public appearances. For further information, including investor guidance, SEC releases, and SRO rules, see sec. govdivisionsmarketregsecuritiesanalysts. htm. In addition, staff responses to frequently asked questions are available at sec. govdivisionsmarketregmregacfaq0803.htm . C. Trading by Members of Exchanges, Brokers and Dealers (Section 11(a)) Broker-dealers that are members of national securities exchanges are subject to additional regulations regarding transactions they effect on exchanges. For example, except under certain conditions, they generally cannot effect transactions on exchanges for their own accounts, the accounts of their associated persons, or accounts that they or their associated persons manage. Exceptions from this general rule include transactions by market makers, transactions routed through other members, and transactions that yield to other orders. Exchange members may wish to seek guidance from their exchange regarding these provisions. D. Extending Credit on New Issues Disclosure of Capacity as Broker or Dealer (Section 11(d)) Section 11(d)(1) of the Act generally prohibits a broker-dealer that participates in the distribution of a new issue of securities from extending credit to customers in connection with the new issue during the distribution period and for 30 days thereafter. Sales by a broker-dealer of mutual fund shares and variable insurance product units are deemed to constitute participation in the distribution of a new issue. Therefore, purchase of mutual fund shares or variable product units using credit extended or arranged by the broker-dealer during the distribution period is a violation of Section 11(d)(1). However, Exchange Act Rule 11d1-2 permits a broker-dealer to extend credit to a customer on newly sold mutual fund shares and variable insurance product units after the customer has owned the shares or units for 30 days. Section 11(d)(2) of the Act requires a broker-dealer to disclose in writing, at or before the completion of each transaction with a customer, whether the broker-dealer is acting in the capacity of broker or dealer with regard to the transaction. E. Regulation NMS Regulation NMS addresses four interrelated topics that are designed to modernize the regulatory structure of the U. S. equity markets: (1) order protection, (2) intermarket access, (3) sub-penny pricing, and (4) market data. The quotOrder Protection Rulequot requires trading centers to establish, maintain, and enforce written policies and procedures reasonably designed to prevent the execution of trades at prices inferior to protected quotations displayed by other trading centers, subject to an applicable exception. To be protected, a quotation must be immediately and automatically accessible. The quotAccess Rulequot requires fair and non-discriminatory access to quotations, establishes a limit on access fees to harmonize the pricing of quotations across different trading centers, and requires each national securities exchange and national securities association to adopt, maintain, and enforce written rules that prohibit their members from engaging in a pattern or practice of displaying quotations that lock or cross automated quotations. The quotSub-Penny Rulequot prohibits market participants from accepting, ranking, or displaying orders, quotations, or indications of interest in a pricing increment smaller than a penny, except for orders, quotations, or indications of interest that are priced at less than 1.00 per share. The quotMarket Data Rulesquot update the requirements for consolidating, distributing, and displaying market information. In addition, amendments to the joint industry plans for disseminating market information modify the formulas for allocating plan revenues among the self-regulatory organizations and broaden participation in plan governance. Regulation NMS also updates and streamlines the existing Exchange Act rules governing the national market system previously adopted under Section 11A of the Exchange Act, and consolidates them into a single regulation. F. Order Execution Obligations (Rules 602-604 of Regulation NMS) Broker-dealers that are exchange specialists or Nasdaq market makers must comply with particular rules regarding publishing quotes and handling customer orders. These two types of broker-dealers have special functions in the securities markets, particularly because they trade for their own accounts while also handling orders for customers. These rules, which include the quotQuote Rulequot and the quotLimit Order Display Rule, quot increase the information that is publicly available concerning the prices at which investors may buy and sell exchange-listed and Nasdaq National Market System securities. The Quote Rule requires specialists and market makers to provide quotation information to their self-regulatory organization for dissemination to the public. The quote information that the specialist or market maker provides must reflect the best prices at which he is willing to trade (the lowest price the dealer will accept from a customer to sell the securities and the highest price the dealer will pay a customer to purchase the securities). A specialist or market maker may still trade at better prices in certain private trading systems, called electronic communications networks, or quotECNs, quot without publishing an improved quote. This is true only when the ECN itself publishes the improved prices and makes those prices available to the investing public. Thus, the Quote Rule ensures that the public has access to the best prices at which specialists and market makers are willing to trade even if those prices are in private trading systems. Limit orders are orders to buy or sell securities at a specified price. The Limit Order Display Rule requires that specialists and market makers publicly display certain limit orders they receive from customers. If the limit order is for a price that is better than the specialist39s or market maker39s quote, the specialist or market maker must publicly display it. The rule benefits investors because the publication of trading interest at prices that improve specialists39 and market makers39 quotes present investors with improved pricing opportunities. G. Regulation ATS: Broker-Dealer Trading Systems Regulation ATS (17 CFR 242.300 et seq.) provides a means for broker-dealers to operate automated trading platforms, to collect and execute orders in securities electronically, without registering as a national securities exchange under Section 6 of the Exchange Act or as an exempt exchange pursuant to Section 5 of the Act. For purposes of the regulation, an alternative trading system or ATS is any organization, association, person, group of persons, or system that constitutes, maintains, or provides a marketplace or facilities for bringing together purchasers and sellers of securities or for otherwise performing with respect to securities the functions commonly performed by a stock exchange as defined in Rule 3b-16 under the Exchange Act. See 17 CFR 242.300. Further, for purposes of the regulation, an ATS may not set rules governing the conduct of subscribers (other than with respect to the use of the particular trading system), or discipline subscribers other than by exclusion from trading. To the extent that an ATS or the sponsoring broker-dealer seeks to establish conduct or disciplinary rules, the entity may be required to register as a national securities exchange or obtain a Commission exemption from exchange registration based on limited trading volume. In order to acquire the status of an ATS, a firm must first be registered as a broker-dealer, and it must file an initial operation report with respect to the trading system on Form ATS at least 20 days before commencing operation. The initial operation report must be accurate and kept current. The Commission does not issue approval orders for Form ATS filings however, the Form ATS is not considered filed unless it complies with all applicable requirements under the Regulation. Regulation ATS contains provisions concerning the system39s operations, including: fair access to the trading system fees charged the display of orders and the ability to execute orders system capacity, integrity and security record keeping and reporting and procedures to ensure the confidential treatment of trading information. An ATS must file with the Division of Trading and Markets quarterly reports regarding its operations on Form ATS-R. An ATS must also comply with any applicable SRO rules and with state laws relating to alternative trading systems and relating to the offer or sale of securities or the registration or regulation of persons or entities effecting securities transactions. Finally, an ATS may not use in its name the word quotexchange, quot or terms similar to the word quotexchange, quot such as the term quotstock market. quot See 17 CFR 242.301. For further information on the operation and regulation of alternative trading systems, see the adopting release for Regulation ATS at sec. govrulesfinal34-40760.txt . H. Penny Stock Rules (Rules 15g-2 through 15g-9, Schedule 15G) Most broker-dealers that effect transactions in quotpenny stocksquot have certain enhanced suitability and disclosure obligations to their customers. 8 A penny stock is generally defined as any equity security other than a security that: (a) is an NMS stock ( See Rule 600(b)(47)) listed on a quotgrandfatheredquot national securities exchange, (b) is an NMS stock listed on a national securities exchange or an automated quotation system sponsored by a registered national securities association (including Nasdaq) that satisfies certain minimum quantitative listing standards, (c) has a transaction price of five dollars or more, (d) is issued by a registered investment company or by the Options Clearing Corporation, (e) is a listed security futures product, or (f) is a security whose issuer has met certain net tangible assets or average revenues ( See Rule 3a51-1). Penny stocks include the equity securities of private companies with no active trading market if they do not qualify for one of the exclusions from the definition of penny stock. Before a broker-dealer that does not qualify for an exemption 9 may effect a solicited transaction in a penny stock for or with the account of a customer it must: (1) provide the customer with a risk disclosure document, as set forth in Schedule 15G, and receive a signed and dated acknowledgement of receipt of that document from the customer ( See Rule 15g-2) (2) approve the customer39s account for transactions in penny stocks, provide the customer with a suitability statement, and receive a signed a dated copy of that statement from the customer and (3) receive the customer39s written agreement to the transaction ( See Rule 15g-9). The broker-dealer also must wait at least two business days after sending the customer the risk disclosure document and the suitability statement before effecting the transaction. In addition, Exchange Act Rules 15g-3 through 15g-6 generally require a broker-dealer to give each penny stock customer: information on market quotations and, where appropriate, offer and bid prices the aggregate amount of any compensation received by the broker-dealer in connection with such transaction the aggregate amount of cash compensation that any associated person of the broker-dealer, who is a natural person and who has communicated with the customer concerning the transaction at or prior to the customerrsquos transaction order, other than a person whose function is solely clerical or ministerial, has received or will receive from any source in connection with the transaction and monthly account statements showing the market value of each penny stock held in the customerrsquos account. I. Privacy of Consumer Financial Information (Regulation S-P) Broker-dealers, including foreign broker-dealers registered with the Commission and unregistered broker-dealers in the United States, must comply with Regulation S-P, ( See 17 CFR Part 248) even if their consumers are non-U. S. persons or if they conduct their activities through non-U. S. offices or branches. Regulation SP generally requires a broker-dealer to provide its customers with initial, annual and revised notices containing specified information about the broker-dealer39s privacy policies and practices. These notices must be clear and conspicuous, and must accurately reflect the broker-dealer39s policies and practices. See 17 CFR 248.4, 248.5, 248.6 and 248.8. Before disclosing nonpublic personal information about a consumer to a nonaffiliated third party, a broker-dealer must first give a consumer an opt-out notice and a reasonable opportunity to opt out of the disclosure. See 17 CFR 248.7 and 248.10. There are exceptions from these notice and opt-out requirements for disclosures to other financial institutions under joint marketing agreements and to certain service providers. See 17 CFR 248.13. There also are exceptions for disclosures made for purposes such as maintaining or servicing accounts, and disclosures made with the consent or at the direction of a consumer, or for purposes such as protecting against fraud, reporting to consumer reporting agencies, and providing information to law enforcement agencies. See 17 CFR 248.14 and 248.15. Regulation SP also imposes limits on the re-disclosure and re-use of information, and on sharing account number information with nonaffiliated third parties for use in telemarketing, direct mail marketing and email marketing. See 17 CFR 248.11 and 248.12. In addition, it includes a safeguards rule that requires a broker-dealer to adopt written policies and procedures for administrative, technical, and physical safeguards to protect customer records and information. See 17 CFR 248.30(a). Further, it includes a disposal rule that requires a broker-dealer (other than a broker-dealer registered by notice with the Commission to engage solely in transactions in securities futures) that maintains or possesses consumer report information for a business purpose to take reasonable measures to protect against unauthorized access to or use of the information in connection with its disposal. See 17 CFR 248.30(b). Recently proposed amendments which would further strengthen the privacy protections under Regulation S-P are available at sec. govrulesproposed200834-57427.pdf . J. Investment Adviser Registration Broker-dealers offering certain types of accounts and services may also be subject to regulation under the Investment Advisers Act. 10 (An investment adviser is defined as a person who receives compensation for providing advice about securities as part of a regular business.) ( See Section 202(a)(11) of the Investment Advisers Act .) In general, a broker-dealer whose performance of advisory services is quotsolely incidentalquot to the conduct of its business as a broker-dealer and that receives no quotspecial compensationquot is excepted from the definition of investment adviser. Thus, for example, a broker-dealer that provides advice and offers fee-based accounts (i. e. accounts that charge an asset-based or fixed fee rather than a commission, mark-up, or mark-down) must treat those accounts as advisory because an asset-based fee is considered quotspecial compensation. quot Also, under a recently proposed rule, a broker-dealer would be required to treat (1) each account over which it exercises investment discretion as an advisory account, unless the investment discretion is granted by a customer on a temporary or limited basis and (2) an account as advisory if the broker-dealer charges a separate fee for, or separately contracts to provide, advisory services. ( See sec. govrulesproposed2007ia-2652.pdf .) Finally, under the same proposed rule, a broker-dealer that is registered under the Exchange Act and registered under the Investment Advisers Act would be an investment adviser solely with respect to those accounts for which it provides services that subject the broker-dealer to the Investment Advisers Act. VI. ARBITRATION Pursuant to the rules of self-regulatory organizations, broker-dealers are required to arbitrate disputes with their customers, if the customer chooses to arbitrate. See e. g. . NASD Code of Arbitration Procedure for Customer Disputes, Rule 12200 American Stock Exchange, Rule 600 and Chicago Board of Options Exchange, Rule 18.1. VII. FINANCIAL RESPONSIBILITY OF BROKER-DEALERS Broker-dealers must meet certain financial responsibility requirements, including: maintaining minimum amounts of liquid assets, or net capital taking certain steps to safeguard the customer funds and securities and making and preserving accurate books and records. A. Net Capital Rule (Rule 15c3-1) The purpose of this rule is to require a broker-dealer to have at all times enough liquid assets to promptly satisfy the claims of customers if the broker-dealer goes out of business. Under this rule, broker-dealers must maintain minimum net capital levels based upon the type of securities activities they conduct and based on certain financial ratios. For example, broker-dealers that clear and carry customer accounts generally must maintain net capital equal to the greater of 250,000 or two percent of aggregate debit items. Broker-dealers that do not clear and carry customer accounts can operate with lower levels of net capital. B. Use of Customer Balances (Rule 15c3-2) Broker-dealers that use customers39 free credit balances in their business must establish procedures to provide specified information to those customers, including: the amount due to those customers the fact that such funds are not segregated and may be used by the broker-dealer in its business and the fact that such funds are payable on demand of the customer. C. Customer Protection Rule (Rule 15c3-3) This rule protects customer funds and securities held by broker-dealers. Under the rule, a broker-dealer must have possession or control of all fully-paid or excess margin securities held for the account of customers, and determine daily that it is in compliance with this requirement. The broker-dealer must also make periodic computations to determine how much money it is holding that is either customer money or obtained from the use of customer securities. If this amount exceeds the amount that it is owed by customers or by other broker-dealers relating to customer transactions, the broker-dealer must deposit the excess into a special reserve bank account for the exclusive benefit of customers. This rule thus prevents a broker-dealer from using customer funds to finance its business. D. Required Books, Records, and Reports (Rules 17a-3, 17a-4, 17a-5, 17a-11) 11 Broker-dealers must make and keep current books and records detailing, among other things, securities transactions, money balances, and securities positions. They also must keep records for required periods and furnish copies of those records to the SEC on request. These records include e-mail. Broker-dealers also must file with the SEC periodic reports, including quarterly and annual financial statements. The annual statements generally must be certified by an independent public accountant. En outre, les courtiers en valeurs mobilières doivent informer la SEC et l'OAR 12 pertinente au sujet du capital net, de la tenue des registres et d'autres problèmes opérationnels et, dans certains cas, déposer des rapports concernant ces problèmes dans certaines périodes. This gives us and the SROs early warning of these problems. E. Risk Assessment Requirements (Rules 17h-1T and 17h-2T) Certain broker-dealers must maintain and preserve certain information regarding those affiliates, subsidiaries and holding companies whose business activities are reasonably likely to have a material impact on their own financial and operating condition (including the broker-dealer39s net capital, liquidity, or ability to conduct or finance operations). Broker-dealers must also file a quarterly summary of this information. This information is designed to permit the SEC to assess the impact these entities may have on the broker-dealer. VIII. OTHER REQUIREMENTS In addition to the provisions discussed above, broker-dealers must comply with other requirements. These include: submitting to Commission and SRO examinations participating in the lost and stolen securities program complying with the fingerprinting requirement maintaining and reporting information regarding their affiliates following certain guidelines when using electronic media to deliver information and maintaining an anti-money laundering program. A. Examinations and Inspections (Rules 15b2-2 and 17d-1) Broker-dealers are subject to examination by the SEC and the SROs. The appropriate SRO generally inspects newly-registered broker-dealers for compliance with applicable financial responsibility rules within six months of registration, and for compliance with all other regulatory requirements within twelve months of registration. A broker-dealer must permit the SEC to inspect its books and records at any reasonable time. B. Lost and Stolen Securities Program (Rule 17f-1) In general, all broker-dealers must register in the lost and stolen securities program. The limited exceptions include broker-dealers that effect securities transactions exclusively on the floor of a national securities exchange solely for other exchange members and do not receive or hold customer securities, and broker-dealers whose business does not involve handling securities certificates. Broker-dealers must report losses, thefts, and instances of counterfeiting of securities certificates on Form X-17F-1A, and, in some cases, broker-dealers must make inquiries regarding securities certificates coming into their possession. Broker-dealers must file these reports and inquiries with the Securities Information Center (SIC), which operates the program for the SEC. A registration form can be obtained from Securities Information Center, P. O. Box 55151, Boston, MA 02205-5151. For registration and additional information, see the SIC39s website at secic . C. Fingerprinting Requirement (Rule 17f-2) Generally, every partner, officer, director, or employee of a broker-dealer must be fingerprinted and submit his or her fingerprints to the U. S. Attorney General. This requirement does not apply, however, to broker-dealers that sell only certain securities that are not ordinarily evidenced by certificates (such as mutual funds and variable annuities) or to persons who do not sell securities, have access to securities, money or original books and records, and do not supervise persons engaged in such activities. A broker-dealer claiming an exemption must comply with the notice requirements of Rule 17f-2. Broker-dealers may obtain fingerprint cards from their SRO and should submit completed fingerprint cards to the SRO for forwarding to the FBI on behalf of the Attorney General. D. Use of Electronic Media by Broker-Dealers The Commission has issued two interpretive releases discussing the issues that broker-dealers should consider in using electronic media for delivering information to customers. These issues include the following: Will the customer have notice of and access to the communication Will there be evidence of delivery Did the broker-dealer take reasonable precautions to ensure the integrity, confidentiality, and security of any personal financial information See Securities Exchange Act Release No. 37182 (May 15, 1996), 61 FR 24644. See also . Securities Exchange Act Release No. 39779 (March 23, 1998), 63 FR 14806 (sec. govrulesinterp33-7516.htm ). E. Electronic Signatures (E-SIGN) Broker-dealers should also consider the impact, if any, that the Electronic Signatures in Global and National Commerce Act (commonly known as E-SIGN), Pub. L. No. 106-229, 114 Stat. 464 (2000) 15 U. S.C. sect7001, has on their ability to deliver information to customers electronically. F. Anti-Money Laundering Program Broker-dealers have broad obligations under the Bank Secrecy Act (quotBSAquot) 13 to guard against money laundering and terrorist financing through their firms. The BSA, its implementing regulations, and Rule 17a-8 under the Exchange Act require broker-dealers to file reports or retain records relating to suspicious transactions, customer identity, large cash transactions, cross-border currency movement, foreign bank accounts and wire transfers, among other things. The BSA, as amended by the USA PATRIOT Act, as well as SRO rules (e. g. NASD Rule 3011 and NYSE Rule 445), also requires all broker-dealers to have anti-money laundering compliance programs in place. Firms must develop and implement a written anti-money laundering compliance program, approved in writing by a member of senior management, which is reasonably designed to achieve and monitor the member39s ongoing compliance with the requirements of the BSA and its implementing regulations. Under this obligation, firms must: establish and implement policies and procedures that can be reasonably expected to detect and cause the reporting of suspicious transactions establish and implement policies, procedures, and internal controls reasonably designed to achieve compliance with the BSA and implementing regulations provide for independent testing for compliance, to be conducted by member personnel or by a qualified outside party designate and identify to the SROs an individual or individuals responsible for implementing and monitoring the day-to-day operations and internal controls of the program and provide prompt notification regarding any change in such designation(s) and provide ongoing training for appropriate personnel. For a compilation of key anti-money laundering laws, rules and guidance applicable to broker-dealers, see Anti-Money Laundering Source Tool sec. govaboutofficesocieamlsourcetool. htm see also, FINRA Anti-Money Laundering Issue Center finra. orgRulesRegulationIssueCenterAnti-MoneyLaunderingindex. htm. In addition, the Financial Crimes Enforcement Network (quotFinCENquot), the division within the Department of the Treasury that administers the BSA, provides useful information for helping financial institutions, including broker-dealers, meet their BSA obligations. See FinCEN Web site fincen. gov . G. Office of Foreign Assets Control Broker-dealers have an obligation to comply with the sanctions programs administered by the Department of Treasury39s Office of Foreign Assets Control (OFAC). OFAC administers and enforces economic and trade sanctions based on US foreign policy and national security goals against targeted foreign countries, terrorists, international narcotics traffickers, and those engaged in activities related to the proliferation of weapons of mass destruction. 14 OFAC acts under Presidential wartime and national emergency powers, as well as authority granted by specific legislation, to impose controls on transactions and freeze foreign assets under US jurisdiction. OFAC39s sanctions programs are separate and distinct from, and in addition to, the anti-money laundering requirements imposed under the BSA on broker-dealers. 15 Unlike the BSA, OFAC programs apply to all U. S. persons and are applicable across business lines. OFAC programs are also strict liability programs mdash there are no safe harbors and no de minimis standards, although having a comprehensive compliance program in place could act as a mitigating factor in any enforcement action. OFAC publishes regulations implementing each of its programs, which include trade restrictions and asset blockings against particular countries and parties tied to terrorism, narcotics trafficking, proliferation of weapons of mass destruction, as well as a number of programs targeting members of certain foreign jurisdictions. As part of its efforts to implement these programs, OFAC publishes a list of Specially Designated Nationals, which is frequently updated on an as-needed basis. 16 In general, OFAC regulations require you to do the following: block accounts and other property of specified countries, entities, and individuals prohibit or reject unlicensed trade and financial transactions with specified countries, entities, and individuals and report all blockings and rejections of prohibited transactions to OFAC within ten days of the occurrence and annually. 17 OFAC has the authority to impose civil penalties of over 1,000,000 per count for violations of its sanctions programs. OFAC has stated that it will take into account the adequacy of your OFAC compliance program when it evaluates whether to impose a penalty if an OFAC violation occurs. To guard against engaging in OFAC prohibited transactions, you should generally follow a best practice of quotscreening againstquot the OFAC lists. 18 Consistent with this best practice, you should take care to screen all new accounts, existing accounts, customers and relationships against the OFAC lists, including any updates to the lists. This screening should include originators or recipients of wire and securities transfers. 19 H. Business Continuity Planning The Commission, Federal Reserve Board, and Comptroller of the Currency published an interagency White Paper emphasizing the importance of core clearing and settlement organizations and establishing guidelines for their capacity and ability to restore operations within a short time of a wide-scale disruption. 20 Separately, the Commission also published a Policy Statement urging the organized securities markets to improve their business continuity arrangements, 21 and encouraging SRO-operated markets and electronic communications networks, or ECNs to establish plans to enable the restoration of trading no later than the business day following a wide-scale disruption. In 2004, NASD and the NYSE adopted rules requiring every member to establish and maintain a business continuity plan, with elements as specified in the rules, and to provide the respective SROs with emergency contact information. See NASD Rule 3510 and NYSE Rule 446. See also . sec. govrulessronasd34-49537.pdf . IX. WHERE TO GET FURTHER INFORMATION For general questions regarding broker-dealer registration and regulation: Office of Interpretation and Guidance Division of Trading and Markets U. S. Securities and Exchange Commission 100 F Street, NE Washington, DC 20549 (202) 551-5777 e-mail: tradingandmarketssec. gov For additional information about how to obtain official publications of SEC rules and regulations, and for on-line access to SEC rules: Superintendent of Documents Government Printing Office Washington, DC 20402-9325 gpo. gov For copies of SEC forms and recent SEC releases, Publications Section U. S. Securities and Exchange Commission 100 F Street, NE Washington, DC 20549 (202) 551-4040 Other useful addresses, telephone numbers, and websites: SEC39s website: sec. gov The SEC39s website contains contact numbers for SEC offices in Washington and for the SEC39s regional offices: sec. govcontactaddresses. htm . Financial Industry Regulatory Authority 9509 Key West Avenue Rockville, MD 20850 (301) 590-6500 (call center) (800) 289-9999 (to check on the registration status of a firm or individual) finra. org New York Stock Exchange, Inc. 20 Broad Street New York, NY 10005 (212) 656-3000 nyse North American Securities Administrators Association, Inc. 750 First Street, NE, Suite 1140 Washington, DC 20002 (202) 737-0900 nasaa. org Municipal Securities Rulemaking Board gt1900 Duke Street, Suite 600 Alexandria, VA 22314 (703) 797-6600 msrb. org Securities Investor Protection Corporation 805 15th Street, N. W. Suite 800 Washington, D. C. 20005-2215 (202)371-8300 sipc. org e-mail: asksipcsipc. org We wish to stress that we have published this guide as an introduction to the federal securities laws that apply to brokers and dealers. It only highlights and summarizes certain provisions, and does not relieve anyone from complying with all applicable regulatory requirements. You should not rely on this guide without referring to the actual statutes, rules, regulations, and interpretations. 1 The Division of Trading and Markets was known as the Division of Market Regulation from August 7, 1972, until November 14, 2007. 2 The treatment of dividend (or interest) reinvestment and stock purchase plans is addressed in Rule 102(c) of Regulation M. ( See Part V. A.7.) 3 Section 9(a) prohibits particular manipulative practices regarding securities registered on a national securities exchange. Section 10(b) is a broad quotcatch-allquot provision that prohibits the use of quotany manipulative or deceptive device or contrivancequot in connection with the purchase or sale of any security. Sections 15(c)(1) and 15(c)(2) apply to the over-the-counter markets. Section 15(c)(1) prohibits broker-dealers from effecting transactions in, or inducing the purchase or sale of, any security by means of quotany manipulative, deceptive or other fraudulent device, quot and Section 15(c)(2) prohibits a broker-dealer from making fictitious quotes. 4 These include Rules 10b-1 through 10b-18, 15c1-1 through 15c1-9, 15c2-1 through 15c2-11, and Regulation M. 5 In addition, Rule 11Ac1-3 requires broker-dealers to inform their customers, upon opening a new account and annually thereafter, of their policies regarding payment for order flow and for determining where to route a customer39s order. 6 The purpose of this disclosure is to inform the customer of the nature and extent of a broker-dealer39s conflict of interest. Broker-dealers are neither required to disclose the precise amount of these payments nor any formula that would allow a customer to calculate this amount. Nevertheless, Rule 10b-10 is not a safe harbor from the anti-fraud provisions. Recent enforcement actions have indicated that failures to disclose the nature and extent of the conflict of interest may violate Section 17(a)(2) of the 1933 Act. See Edward D. Jones amp Co. L. P. Securities Exchange Act Release No. 50910 (Dec. 22, 2004) Morgan Stanley DW, Inc. Securities Exchange Act Release No. 48789 (Nov. 17, 2003). 7 SEC, Report by Division of Market Regulation, Broker-Dealer Policies and Procedures Designed to Segment the Flow and Prevent the Misuse of Material Non-Public Information, 1989-1990 Transfer Binder Fed. Sec. L. Rep. (CCH) 84,520 at p. 80, 620-25 (March, 1990). 8 Rule 15g-1(a)(1) establishes a transaction exemption for brokers or dealers whose commission equivalents, mark-ups, and mark-downs from transactions in penny stocks during each of the immediately preceding three months and during eleven or more of the preceding twelve months, or during the immediately preceding six months, did not exceed five percent of its total commissions, commission equivalents, mark-ups, and mark-downs from transactions in securities during those months. 9 Exemptions from the requirements of Exchange Act Rules 15g-2 through 15g-6 are provided for non-recommended transactions, broker-dealers doing a minimal business in penny stocks, trades with institutional investors, and private placements. See Rule 15g-1. Rule 15g-9(c) exempts certain transactions from the requirements of Rule 15g-9. 10 See Certain Broker-Dealers Deemed Not To Be Investment Advisers, Exchange Act Release No. 51523 (April 12, 2005). 11 Rules 17a-2, 17a-7, 17a-8, 17a-10 and 17a-13 contain additional recordkeeping and reporting requirements that apply to broker-dealers. 12 When a broker-dealer is a member of more than one SRO, the SEC designates the SRO responsible for examining such broker-dealer for compliance with financial responsibility rules (the quotdesignated examining authorityquot). 13 The Currency and Foreign Transactions Reporting Act of 1970 (commonly referred to as the quotBank Secrecy Actquot) is codified at 31 U. S.C. 5311, et seq. The regulations implementing the Bank Secrecy Act are located at 31 CFR Part 103. 14 A list of countries subject to OFAC sanctions, as well as a list of individuals and companies owned or controlled by, or acting for or on behalf of, targeted counties (collectively called Specially Designated Nationals (SDNs)), is available on the OFAC website: treas. govofac . A summary of OFAC regulations as they apply to the securities industry can be found at the following link: treas. govofficesenforcementofacregulationst11facsc. pdf See also Federal Financial Institutions Examination Council Bank Secrecy ActAnti-Money Laundering Examination Manual (quotFFIEC Manualquot), at pages 137-145 (8242007). The FFIEC Manual contains an entire section outlining best practices for OFAC Compliance, including risk matrices. Although that manual is written for the banking community, it provides information which may be useful to broker-dealers. 15 See also FinCEN Interpretive Release No. 2004-02 quotUnitary Filing of Suspicious Activity and Blocking Reports, quot 69 Fed. Règl. 76847 (Dec. 23, 2004). 16 OFAC offers a RISS feed service as well as an email notice system which pushes out digital information about its programs, including updates to its SDN List. See treas. govofac. These may be especially helpful to smaller firms whose OFAC compliance programs are more manual in nature. 17 You will find forms for blocking and rejection reports on OFAC39s website using the following links: 18 The Financial Industry Regulatory Authority (FINRA) offers a tool that assists firms to search for names on OFAC lists: apps. finra. orgRulesRegulationOFAC1Default. aspx . 19 See also FFIEC Manual at 140 (quotthe extent to which the bank includes account parties other than accountholders (e. g. beneficiaries, guarantors, principals, beneficial owners, nominee shareholders, directors, signatories, and powers of attorney) in the initial OFAC review during the account opening process, and during subsequent database reviews of existing accounts, will depend on the bank39s risk profile and available technology. quot). 20 Interagency Paper on Sound Practices to Strengthen the Resilience of the U. S. Financial Systems, Securities Exchange Act Release No. 47638 (April 7, 2003), 68 FR 17809 (April 11, 2003), sec. govnewsstudies34-47638.htm . 21 Policy Statement: Business Continuity Planning for Trading Markets, Securities Exchange Act Release No. 48545 (September 25, 2003), 68 FR 56656 (October 1, 2003), sec. govrulespolicy34-48545.htm. Home 62 Registration 62 Registration Overview for Retail Foreign Exchange Dealers and Forex IB, CTA and CPO Applicants Registration Overview for Retail Foreign Exchange Dealers and Forex IB, CTA and CPO Applicants The Commodity Futures Trading Commission (CFTC) has issued final forex rules which become effective on October 18, 2010. Any firm acting as a counterparty to certain retail off-exchange forex transactions is required to register as a Retail Foreign Exchange Dealer (RFED). (Futures Commission Merchants offering forex transactions to its retail customers but acting primarily or substantially as a traditional FCM are exempt from registering as an RFED but must be approved as a Forex Firm and designated as a Forex Dealer Member of NFA.) In addition, any individual acting as a forex solicitor, account manager andor pool operator is required to register with the CFTC as Introducing Brokers (IBs), Commodity Trading Advisors (CTAs) or Commodity Pool Operators (CPOs) and become Members of National Futures Association. National Futures Association (NFA) has prepared this brief summary of the forex registration requirements to give firm and individual applicants a basic understanding of the registration process. All forex firms registering as a Retail Foreign Exchange Dealer, Introducing Broker (Independent or Guaranteed), Commodity Trading Advisor or Commodity Pool Operator must meet the following requirements: Completed Online Registration Forms: Applicants must file a completed 7-R form through NFAs Online Registration System (ORS).160 Additional Requirements for Introducing Brokers: Applicants registering as Guaranteed Introducing Brokers must submit a completed Guarantee Agreement (Form 1-FR-IB Part B) from an RFED or FCM. Applicants registering as Independent Introducing Brokers must meet additional financial requirements. Additional Requirements for Commodity Trading Advisors and Commodity Pool Operators: Before they can begin soliciting customers, CTAs and CPOs must submit a Disclosure Document to160NFA for approval. The Disclosure Document must be completed in accordance with NFA Compliance Rule 2-41. Individual Registration Forms : Any individual applying as an Associated Person (AP) Principal or a Forex AP of a Forex IB, CTA, CPO or RFED must file a completed 8-R form through NFAs Online Registration System (ORS). Proficiency Exams: All individuals who solicit retail off-exchange forex business or who supervise that activity will be required to take and pass two exams. One is the National Commodity Futures Examination (NCFE or Series 3 ), which covers on-exchange futures trading theory, terminology, and regulation. The second exam is the Retail Off-Exchange Forex Examination, Series 34. This hour-long exam consists exclusively of forex-related questions. NFA has published Study Guides for both exams in the Registration section of its website (nfa. futures. org ). Both exams are currently available and are administered by the Financial Industry Regulatory Authority (FINRA). The testing application form (U10)160must be160completed online at finra. org. The fee for taking the Series 3 exam is 115 and the fee for taking the Series 34 exam is 75. Fingerprint Cards: NFA requires all individual applicants to submit fingerprint cards, which are sent to the Federal Bureau of Investigation (FBI) to determine if the applicant has a criminal record. NFA can only accept and process a complete FBI Applicant card. These cards are available by contacting NFAs Information Center at the numbers listed below. Applicants are encouraged to submit more than one set of fingerprints with their application to avoid delays in obtaining additional sets if necessary for processing. NFA offers a fingerprinting service for NFA applicants at the Chicago office (300 South Riverside Plaza, Suite 1800) between the hours of 8:30 a. m. and 4:00 p. m. for 15 (cash, check or money order). In order to use NFAs fingerprint service, visitors must be pre-registered in the buildings visitor registry. Visitors should contact NFAs Information Center at the numbers listed below or send an email to informationnfa. futures. org to pre-register their name and date of visit so they can receive access to NFAs offices on the 18th floor. NFA recommends that visitors pre-register at least a day prior to their visit. All individuals being fingerprinted will be required to present two forms of identification, one of which is a valid picture ID issued by a government agency, in order to verify the identity of the person being fingerprinted. NFA now submits digital images of fingerprints to the FBI for criminal background checks. Results are received in three days or less, and in some cases within several hours, resulting in a faster and more efficient registration process. CFTC Registration Fees: 500 non-refundable registration fee for RFEDs 200 non-refundable registration fee for each IB, CTA or CPO 85 non-refundable registration fee for each principal andor AP of an IB, CTA or CPO NFA Membership Dues: 125,000 non-refundable160annual dues for a Retail Foreign Exchange Dealer 2,500 non-refundable annual dues for each IB, CTA or CPO This brief overview is not intended to provide a comprehensive guide to CFTC registration. NFA has published an ORS Users Guide 160 and a tutorial 160 on its website that contain more detailed information. Within the next several days, NFA will be posting a series of educational videos on its website that will provide step-by-step instructions for common registration tasks. For additional information, visit NFAs website at nfa. futures. org or contact NFAs Information Center at (800) 621-3570 from 8:00 a. m. to 5:00 p. m. CT Monday through Friday. 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