Broker-Dealer Requirements

POST-EFFECTIVE REQUIREMENTS

Once the certificate is issued, it remains in effect until suspended or revoked by order of the Commissioner or surrendered by the broker-dealer. Some, but not all, post effective requirements may be found in the Information to Assist Persons Applying for a Broker-Dealer Certificate - POST EFFECTIVE Requirements. A synopsis of the information that may be found in this page is as follows:

Annual Renewal (Assessment) [Code Section25608(o)]

A minimum annual assessment fee of $75 is due in December of each year. Payment of the assessment fee will keep the certificate in effect during the next calendar year.

If a broker-dealer participates in the renewal program with the Central Registration Depository ("CRD"), the minimum assessment fee should be paid directly to CRD in accordance with its instructions. Generally, the Preliminary Renewal Statement is available online for retrieval and printing via CRD beginning early November. CRD must receive full payment of the firm’s Preliminary Renewal Statement in early December.  Detailed information concerning the renewal program may be found on FINRA's website at: http://www.finra.org/RegulatorySystems/CRD/RenewalProgram/index.htm?ssSourceNodeld=405.

If a broker-dealer does not participate in the renewal program with CRD, the minimum assessment fee should be paid directly to the Commissioner by December 31st.

The Commissioner may assess any additional amount above the minimum amount of $75 that is reasonable and necessary to support the broker-dealer program. This assessment is based on each broker-dealer's pro rata share of all costs and expenses reasonably incurred in the administration of the broker-dealer program. If an additional amount is assessed, the Commissioner will notify each broker-dealer by mail on or before May 30th of each year.

BD Amendments [CCR §260.241.4]

A broker-dealer should promptly amend Form BD whenever the information in Form BD becomes inaccurate. Any amendments to Form BD should be filed within 30 days after the change has occurred. If the broker-dealer is filing with the CRD, the amendment should be filed directly with CRD in accordance with its procedures. If the broker-dealer does not file with CRD, the amendment should be filed directly with the Commissioner

Annual Reports [CCR §260.241.2]

(1) If a broker-dealer is registered with the Securities and Exchange Commission (“SEC”), the broker-dealer is not required to file an annual financial report with the Commissioner but must provide upon request of the Commissioner a copy of any report filed under SEC Rule 17 CFR 240.17a-5. 

(2) If a broker-dealer is not registered with the SEC and is subject to the capital requirements found in CCR § 260.216.12, the broker-dealer should file with the Commissioner, not more than 90 days after its year-end, an annual financial report in accordance with the instructions found in CCR § 260.241.2.  The financial statements included in the annual report should be prepared in accordance with generally accepted accounting principles and should be audited by either an independent certified public accountant or independent public accountant.  The financial statements need not be audited if the broker-dealer has not held or accepted custody of funds and securities for or owed money or securities to customers or clients during the period covered by the report and the securities business has been limited to soliciting subscriptions for securities of an issuer and the broker-dealer promptly forwarded the subscriptions to the issuer, underwriter, or sponsor or other distributor of the securities and received checks, drafts, notes or other evidence of indebtedness payable solely to the issuer, underwriter, sponsor or distributor who delivered the securities purchased directly to the subscriber.  A verification form should accompany the financial statements. The verification form (a) should affirmatively state, to the best knowledge and belief of the person making the verification, that the financial statements and supporting schedules are true and correct and (b) must be signed under penalty of perjury. The broker-dealer may use the Verification Form Pursuant to California Code of Regulations Rule 260.241.2(b) (Form 260.241.2(b)) for this purpose.

Surrender of Certificate [CCR §260.242]

A broker-dealer may surrender its certificate by completing Form BDW in accordance with the Form BDW Instructions. If the broker-dealer is filing with CRD, Form BDW is to be filed directly with CRD in accordance with its procedures. If they are not filing with CRD, Form BDW is to be filed directly with the Commissioner