If you’ve reached this page, you may have been searching for “Series 79” or “M&A Broker Dealer” or “Series 79 Broker Dealer.” Perhaps you recently left a large investment bank to run your own boutique M&A Advisory firm, knowing you need to keep your Series 79 license with a broker-dealer or perhaps you’ve been advised from either your attorney or a client’s attorney that you need to either register with or as a broker-dealer.
If you choose to register with a broker-dealer (wherein a broker-dealer sponsors you to take the Series 79 exam), it is important to understand how the new relationship will affect your current processes. I’ve attempted to outline what I belive is complete and accurate, at least in our firm’s experience, while in a concise manner.
- You, and any other individuals within your group who wish to register with the broker-dealer will enter into Independent Contractor Agreements, executed by and between the broker-dealer and you, as individuals.
- You will be required to disclose all outside business activities to your broker-dealer. This would include your non-registered advisory firm, any board of director positions, etc. The broker-dealer will have an obligation to either approve such activities, condition your role in such activities or not permit certain activities.
- Upon the broker-dealer submitting your Form U-4 to FINRA, you are effectively registered with the broker-dealer. Upon passing any necessary qualification exams (i.e. Series 79, 63, and possibly Series 62), you are then regsitered and licensed to conduct those securities-related services covered under your securities license(s).
- If the broker-dealer allows you to use your own engagement templates, it will likely have some minor edits: assignability, non allowance of mutual indemnification, etc. All securities related services will be offered by the broker-dealer.
- Upon the broker-dealer submitting your registration, it then becomes charged with a supervisory responsibility over your activities. You should expect to be in regular contact with your compliance officer, who will need to stay informed as to the progress of your deals, access all diligence, etc. You should expect to be required to provide your compliance officer with material updates in real time.
- The broker-dealer will issue compliance certifications at some regular interval, a key component to demonstrating offsite supervision. Our firm, for example, issues quarterly certs, which usually contain FINRA rule updates/reminders; firm policy updates and reminders and required disclosure of all activity/revenue earned for the quarter. Your firm will also be required to administer Continuing Education annually. FINRA will issue continuing education on your two year anniverary and then every three years thereafter.
- Your emails and business related social media will be archived and subject to review by your compliance department.
- Should transactions close that involve securities, services are performed by you in your capacity as a registered representative of the BD. Fees are paid by the client to the BD, a nominal FINRA and SiPC assessment will be deducted, and your broker-dealer will share in such fees, in accordance with your written agreement. You will receive a 1099 for income paid to you. Unfortunately, the law does not permit the BD paying your unregistered entity securities related fees: see section II D. 1 of the SEC’s Guide to Broker-Delaer Registration: http://www.sec.gov/divisions/marketreg/bdguide.htm
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