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Capital Markets Compliance®, LLC (CMC) specializes in providing regulatory guidance for firms that offer securities products as well as banks requiring market risk management reviews. Our clients range from U.S. and internationally based one-person retail broker-dealer operations to full-scale multi registered representative broker-dealers, investment advisers, investment bankers, bank affiliated broker-dealers, state and national chartered banks, credit unions, hedge funds, and financial holding companies.

The Broker-Dealer division offers hourly and flat fee compliance consulting concerning SEC, FINRA, NFA/CFTC, NYSE, AMEX, PCX, PHLX, CBOE, MSRB, ISE rules & regulations, hedge funds, and broker-dealer registration services. We also have an annual compliance program to keep your broker-dealer in compliance throughout the year.

The Investment Adviser division offers hourly and flat fee compliance consulting on state and SEC rules & regulations and investment adviser registration services. We also have an annual compliance program to keep your investment adviser in compliance throughout the year.

The Accounting/Bookkeeping division offers financial statement preparation, bill paying/administration, and payroll for broker-dealers, investment advisors, and many other types of financial industry entities.

The FINOP/CFO division has experienced financial industry accountants on staff with broker-dealer series license 27 or 28 that can serve as your Financial and Operations Principal (FINOP) and Chief Financial Officer (CFO) on an interim or permanent basis.

The Hedge Fund division offers hourly and flat fee compliance consulting and can help you through the process of starting and registering a hedge fund.

The Banking division offers hourly consulting concerning interest rate risk modeling, value-at-risk (VAR) methodology, independent risk management reviews, investment portfolio products, liquidity products, derivatives products, and securitization products. We can provide training in market and liquidity risk management to senior management, board of directors, and internal auditors.

The Insurance division offers hourly and flat fee compliance consulting concerning state insurance registration. We provide compliance services for insurance companies and broker-dealers that offer insurance products.




©1999 Capital Markets Compliance®. All Rights Reserved.

Our Broker-Dealer division offers hourly and flat fee consulting on SEC, FINRA, NFA/CFTC, NYSE, PCX, PHLX , CBOE and MSRB rules & regulations. We also assist in the FINRA, SEC, NFA/CFTC, NYSE, PCX, PHLX , and state application process. We produce and update written supervisory procedures, continuing education needs analysis & written training plans, and execute form filings (Form U-4, Form U-5, Form BD, etc.) via WebCRD.

Our hourly and flat fee consulting services also include specialized projects, mock regulatory examinations and branch audits.


Our Broker-Dealer registration section can take you through the entire application process of becoming a broker-dealer with the different types of self regulated regulatory agencies, Federal agencies and State agencies.

  FINRA Application Process


Capital Markets Compliance®
can take you through the process of becoming a FINRA member broker-dealer . This process includes all of the requirements as described by FINRA's registration rules and regulations.
We have helped hundreds of small to Fortune 500 companies including banks, credit unions, and hedge funds register with FINRA.

We have the knowledge to help you understand the application requirements, the experience of how to deal with the requirements, and we have developed a state-of the-art electronic process to expedite your application with FINRA.  Let one of our experienced consultants guide you through the membership process.

Call us and ask for our Prospect Coordinator and he/she we will set up a FREE telephone appointment to speak with one of our expert consultants. Once we determine the type of broker-dealer that you wish to create, we can provide you with a detailed proposal based on the type of business you wish to offer. Our proposal will include membership with FINRA and your home state.

FAQ regarding the application process. Click on the question below for more information:

  Why do we need CMC to help us with the broker-dealer application process?


FINRA emphasizes that the failure to submit complete and accurate information in a timely manner can result in the cancellation of the application and loss of all monies paid to FINRA. It also stresses that it is imperative that applicants fully understand the application requirements and process before submitting an application. We have taken over 100 different types of broker-dealers through FINRA's application process and fully understand the requirements and the timelines that need to be met through the entire process.


  How much does CMC charges to take my Firm through the FINRA broker-dealer membership process?


The amount we charge for the membership process varies according to the complexity of the type of broker-dealer you are planning to set up.  For example, if you wish to only conduct a Private Placement business, it will be less complicated (less expensive) than a full-service retail broker-dealer that requires a clearing arrangement.

  What CMC services are included in the membership application?


An experienced consultant will walk you through the entire FINRA application process. Your consultant will:

  • Act as a liaison between you and your assigned FINRA examiner assigned to your application

  • Prepare and submit all required broker-dealer documentation for membership with FINRA, the SEC and your home state

  • Create Written Supervisory Procedures(WSP) tailored to your firm's lines of business

  • Prepare the Continuing Education Program & Needs Analysis/Training Plan (CE Plan)

  • Prepare the Anti-Money Laundering Program (AML)

  • Prepare the Business Continuity Plan (BCP)

  • Prepare the business plan and prepare Pro Forma Financial Statements, including Net Capital Pro Forma

  • Prepare necessary responses to Pre-Membership information requests from FINRA and State(s)

  • Prepare you for the FINRA Pre-Membership interview. We will conduct a mock pre-membership interview so that you are prepared for your FINRA interview

  What are the initial FINRA charges to start a broker-dealer?


FINRA's costs associated with starting a broker-dealer vary according to the type of broker-dealer. For most broker-dealers (i.e., private placements, mergers and acquisitions, and full service broker-dealer with a clearing arrangement) the costs are as follows:

FINRA application fee $3,000
Registration fee per representative $85
Initial fingerprint card fee per representative $30.25
Exam fees per representative vary depending on exam needed. The most common exams: Series 7 $250, Series 24 $95, Series 28 $75, Series 63 $82 $60 to $300
Disclosure processing fee (for reps. with disclosure history) $95

FINRA regulatory filing fees are subject to change without notice.


  What are other costs associated with starting a broker-dealer?


Other costs associated with starting a broker-dealer vary according to the complexity of the type of broker-dealer you are planning to set up. Below are some of the costs of starting a broker-dealer set up to conduct private placement and mergers and acquisitions business:

Incorporation and LLC formation State fees $50 and up depends on type of entity and applicable state requirement.
Fidelity Bond $400 and up, depends on number of reps., the state in which you are located, and other factors.
State Fees for securities business registration $120 and up, depends on the state.
State Fees for individual reps. $15 and up, depends on the state.
Obtaining a FINS number with DTC, if applicable $50



.
  What about the Business Plan and Pro Forma Financial Statements?


Creating a business plan is one of the most important aspects of starting a broker-dealer. CMC can provide you with a business plan template to help you get started. We will help you with any questions you might have regarding the business plan, however, we like for you to describe the intended business in order to enhance the potential for success by having a complete understanding of the proposed business and to identify important areas of potential difficulty that could detract from the efficiency and effectiveness of the business.

We will also help you put together the pro-foma financial statements including: the balance sheet with supporting schedules and a computation of net capital, trial balance, and an income statement.


  How long will it take to get approved?


FINRA states that the membership process takes between 90 - 180 days to complete.  If we are able to provide them with everything they ask, it is possible to get the application through in approximately 3 months.  This includes the face-to-face interview (PMI).  Also, the length of the review on the part of the FINRA is relatively shorter if the business of the broker- dealer is more limited, as in a Private Placement broker dealer.

We are not able to make any guarantees on the time it will take to obtain membership since the review time on the part of the assigned FINRA examiner is unknown.  
Once the application is submitted, the examiner is required to respond within 30 days with a request for an interview or with further questions. Even if the examiner is provided all the information and materials they have requested, he/she may have specific questions about the people running the firm or about the business plan. These additional questions may extend the examiner's review and may delay the firms ultimate FINRA membership approval date.

  How does the FINRA application process work?


1) After collecting all of the necessary information from you, we prepare a package of materials for submission to FINRA;

2) The package is electronically submitted;

3) We continue to prepare for the second phase of our submission process;

4) FINRA assigns the application to an examiner;

5) The examiner will review the information submitted and must issue a request for additional information ("deficiency letter") within thirty (30) days of their receipt of the first part of the application;

6) The deficiency letter identifies outstanding items in connection with the application, however the term, "deficiency," means nothing negative. It simply means the examiner needs more information and to request the additional information, the examiner prepares their standard form letter (with slight modifications to fit the circumstances of your firm).

7) Upon receipt of the deficiency letter, we prepare a response and submit that information back FINRA;

8) The examiner reviews the response;

9) Once all of the examiner's requests have been satisfied, he/she will schedule the pre-membership application interview with the officers and owners of the broker-dealer;

10) After a satisfactory, interview and if there are no other items requested at the interview, FINRA will draft a membership agreement that will require execution by the firm's Executive Representative;

11) Once the membership agreement is executed and returned to FINRA, FINRA membership approval should follow. The SEC and home state approval should also follow after approval is shown in FINRA's web-based system Web CRD®.

The description above is intended to outline, in very general terms, the entire application process. Because of our experience and rapport with the various FINRA district offices, we have been able to virtually eliminate any down time in the process. Even so, your FINRA examiner's work load may be very heavy and if so, that can have an impact on the total application processing time.



  Futures & Commodities Application Process


Capital Markets Compliance®
can guide you through the process of becoming a National Futures Association (NFA) member and the registration process with the Commodity Futures Trading Commission (CFTC). The process includes all of the steps required by the NFA's web site link How To Become an NFA Member, and the requirements as promulgated by the Commodity Futures Modernization Act of 2000 (PDF).

We have helped hundreds of small to Fortune 500 companies register with the NFA and CFTC.

Call us and ask for our Prospect Coordinator and he/she we will set up a FREE telephone appointment to speak with one of our expert consultant. An initial call with our expert consultnat will typically take between 30 and 45 minutes to determine the type of futures business that you wish to conduct. Below is a description of the types of NFA memberships.

  Futures Commission Merchant (FCM)


An FCM is an individual or organization which does both of the following:

1. Solicits or accepts orders to buy or sell futures contracts or commodity options; and

2. Accepts money or other assets from customers to support such orders.

  Introducing Broker (IB)


An IB is an individual or organization which solicits or accepts orders to buy or sell futures contracts or commodity options but does not accept money or other assets from customers to support such orders.


  Commodity Pool Operator (CPO)


A CPO is an individual or organization which operates or solicits funds for a commodity pool; that is, an enterprise in which funds contributed by a number of persons are combined for the purpose of trading futures contracts or commodity options, or to invest in another pool.


  Commodity Trading Advisor (CTA)


A CTA is an individual or organization, which, for compensation or profit, advises others as to the value of or the advisability of buying or selling futures contracts or commodity options. Providing advice indirectly includes exercising trading authority over a customer's account as well as giving advice through written publications or other media.



  States Securities Application Process


Capital Markets Compliance®
can assist you with your broker-dealer state registration application process for all 50 states plus the Virgin Islands, Puerto Rico, and other US providences.


We have the knowledge and experience, along with a state-of-the-art computerized process, (stateregistration.com) to expedite your state registration. We can give you time frames for registration with the different states securities division.

Click on the State to visit their web-site

  What does this service include
 

Preparation and submission of all required documentation required by the State(s) per their rules and regulations

Preparation and submission of the Form BD reflecting the states and Form U4 for a responsible supervisor

Preparation and submission of responses to letter from State(s) examiner, if necessary.

  What does the state(s) require for registration?


The paperwork required by the state(s) differs from state to state. For example,

The state of Florida requires the following documents:

The Firm’s latest Balance Sheet and Income Statement, along with a net capital computation

Most recent Audited Annual Financial Statements

The state of Tennessee requires:

Most recent FOCUS reports

Most recent Audited Financial Statements

Designation of Accountant Form

Names of Agents Registering in TN

The Firm’s properly executed written statement that no sales have been made in the State of Tennessee

In most cases, the Tennessee state examiner may require more information about the broker-dealer business model, the broker-dealer's executive team, and how the broker-dealer will conduct securities business in Tennessee.






©1999 Capital Markets Compliance®. All Rights Reserved.

 

 

 



 

 

Our Investment Adviser division offers hourly and flat fee consulting on State and SEC rules & regulations. We also assist in the State and SEC registration process. We produce and update written supervisory procedures, continuing education needs analysis & written training plans, and execute form filings (Form U-4, Form U-5, Form ADV amendments, etc.) via WebCRD.

Our hourly and flat fee consulting services also include specialized projects, including mock regulatory examinations and branch audits.


Our Investment Adviser registration section can take you through the entire application process of becoming an investment adviser with the different types of regulatory agencies at the Federal and State level.

  Investment Adviser Registration


Capital Markets Compliance®
can take you through the process of becoming a State or SEC investment adviser. Our qualified consultants will take you through the entire registration process from start to finish.
The costs for the investment adviser registration process varies according to the structure, disclosures, fees and charges to customers, and whether you offer continuous and regular supervisory or management services.


We have helped hundreds of small to fortune 500 companies including banks, credit unions, and hedge funds register with SEC and the States. Click on the link below for more information about this service.


Call us and ask for our Prospect Coordinator and he/she we will set up a FREE telephone appointment to speak with one of our expert consultants. An initial call with our expert consultnat will typically take between 30 and 45 minutes to discuss the following items:

  Items to cover in your FREE telephone appointment with one of our expert consultants

  • The exact types of services you will want to offer through your IA firm.

  • Will you want to offer wrap programs?  If so, will the IA serve as “manager,” “sponsor,” or will it simply select wrap programs that are sponsored/managed by outside parties.

  • Types of fees you would like to charge and how charged (i.e. quarterly, monthly, arrears, in advance).

  • The types of clients you expect to have.

  • Whether the firm will have discretionary authority for trading client accounts.

  • Do you intend to vote proxies on behalf of clients?

  • Do you expect to have situations that cause the firm to be considered to have custody of client assets (funds or securities)?  (examples: physical possession or control of funds or securities, including check writing ability over client brokerage accounts or non-brokerage depository accounts)

  • Dollar amount of assets under management (“AUM”) you expect to have within the first 120 days of operation.  (See the attached document titled, “Calculation of Assets Under Management” for details.)

  • Prospective broker-dealer of record and/or custodian?

  • # individuals (Investment Adviser Representatives, or “IARs”) offering investment advice on behalf of the firm.

  • Do all IARs have the S65?  (See licensing information within this web page..)

  • States (home state and others) in which you will be offering investment advisory services.

  • Whether you anticipate having any solicitor (i.e. referral) arrangements in place?

  • Legal entity type and formation (i.e. LLC, corporation, state of formation)?

  • Will the new IA firm be affiliated (i.e. under common control or ownership) with an affiliated IA firm that is currently or in the process of seeking IA registration with the SEC?

Subsequent to the preliminary phone call our expert consultant and after determine the type of investment adviser that you wish to create, the consultant will provide you with a detail proposal based on the type of business you wish to offer. Our proposal will include registration with the SEC or State(s).




FAQ regarding the application process. Click on the menu below for more information:

  SEC Registration VS State Registration


Prior to beginning the IA registration process, you will need to determine your primary regulator – the SEC or your home state. Generally speaking, this determination will be based on your firm’s current dollar amount of Assets Under Management (AUM), or the dollar amount of the assets you expect to have under management within 120 days of becoming registered. 


The National Securities Markets Improvement Act of 1996 created the segmentation of regulatory jurisdiction for IA firms.  This act provides a “line in the sand” that helps to categorize all IA firms as being subject to either federal or state registration/regulation.  The primary defining point of this segmentation involves the size of the IA, which is generally measured by the dollar amount of assets it manages. 

 

$ AUM

Governing Jurisdiction

Below $25 million

Typically subject to state jurisdiction

Between $25 million but below $30 million
“Option” to register with the SEC but can remain at state level and may be required to maintain registration at the state level if unable to satisfy a state IA exemption.
$30 million and above
Typically subject to SEC jurisdiction
Other factors may dictate regulatory jurisdiction and certain exemptions are available for both federal and state registration, however, the preceding categories will determine the primary regulatory body for the majority of IA firms.

 

Firms that have less than $25 million of assets under “continuous and regular” management generally must register with the state or states in which they have a place of business and in which they have clients.

Firms that have more than $30 million under management must register with the SEC.  Between $25 million and $30 million the firm is allowed to register with the SEC or it can still maintain a registration with any applicable states. (There are other ways in which a firm that would normally be subject to state registration can actually seek federal registration, such as acting as an investment adviser in 30 or more states.).  Firm's that "register" with the SEC typically will need to "notice file" with their home state and other states in which they have clients.

If a firm is not required and otherwise does not qualify for SEC registration as an IA, it would typically need to "register" with its home state and other states in which it has clients.  The notice filing and registration processes with the states are similar but are not identical. 

  SEC Registration Process


SEC Jurisdiction

Registering with the SEC as an IA involves completing the Form ADV and filing Part 1 electronically via the CRD/IARD system.  The SEC reviews the ADV and will normally complete their review of the application within 30-45 days.  You do not need to send Part 2 and Schedule F of the Form ADV to the SEC, but it does need to be completed so that it can be distributed to clients once the firm is approved to conduct business as an IA.

State Notice Filings for SEC-Registered Firms

In lieu of “registering” directly with the states in which an SEC-registered IA does business, the firm typically must “notice file” in any state in which the firm has a place of business or more than 5 clients.  This is generally accomplished by identifying on the Form ADV the particular states in which the firm may require notice filing. 

Similar to the state registration process, a notice filing with a state jurisdiction by a federally registered firm will typically carry the same financial cost.  In other words, state registration or notice filing fees are generally the same.

  State Registration Process


State Jurisdiction

Registering with the various states is typically more cumbersome than registering with the SEC.  In addition to filing Part 1 of the Form ADV online for the states to review, you must submit various hard copy materials to the states in connection with your IA application.  These materials vary by state, but generally include some of the following:

  • Part 2 and Schedule F of the Form ADV;
  • A sample advisory contract;
  • Organizational documents;
  • Financial statements;
  • Proof of passing the required IA qualification examinations;
  • Firm and IAR registration fees;
  • IAR fingerprints; and/or
  • Various state-specific forms.

Once the state receives the application and reviews the materials, it is not uncommon that it will issue a letter requesting clarification or that certain changes be made to the Form ADV.  Depending on the state’s workload, approval usually takes 30-60 days after all of the application materials have been submitted.

  Investment Adviser Representative: Definition, Registration, Licensing/Examination Requirements


Definition of Investment Adviser Representative

The states (not the SEC) have jurisdiction over the registration of the individuals (i.e. IARs) who provide advice on behalf of the IA.  Each state has its own definition of IAR, but the definition generally includes all individuals who provide advice to clients, determine which advice should be given, solicit advisory services, or supervise employees who perform any of the foregoing functions.

IARs of SEC-registered firms generally must register in their home state, and may require registration in states in which they have a place of business.

IARs of state-registered firms generally must register in their home state and, typically, in any state in which they have more than 5 clients or a place of business.  These requirements may vary on a state-to-state basis based on the state’s definition of IAR and the state’s registration requirements.

Representative Registration Process

The process for registering as an IAR is accomplished by preparing and filing a Form U4.  The Form U4 is available through the CRD system and thus, is filed electronically along with the IAR registration fees. 

Some state jurisdictions will require IARs to be fingerprinted and may even require the fingerprints to be submitted on that state’s own fingerprint card.  Some state jurisdictions may also require certain other forms or information to be submitted on behalf of an IAR seeking registration. 

Finally, if an IAR has any disclosure history, his/her registration process may be delayed or rejected entirely.  Included in the category of “disclosure” history, are the following:

  • Adverse regulatory actions;
  • Customer complaints/arbitrations;
  • Bankruptcy (personal or for a company the IAR owned or controlled);
  • Criminal history; or
  • Violations of securities industry rules/regulations.

Failing to provide complete and truthful details about any of these sorts of situations/events can create significant headaches in an IAR’s registration process and possibly even the firm’s IA application. 

Licensing/Examination Requirements

In virtually all states, the Series 65 Uniform State Law Investment Adviser Examination would satisfy the state licensing requirements for individuals serving in the capacity of an IAR in or with residents of that state.  Many states will recognize certain designations in order for an individual to satisfy his/her licensing requirements as well.  Some of these are as follows:

(note – not all states recognize these designations)

  • CFA – Chartered Financial Analyst, granted by the Association for Investment Management and Research;
  • ChFc – Chartered Financial Consultant awarded by The American College, Bryn Mawr, Pennsylvania;
  • CFP – Certified Financial Planner, awarded by the Certified Financial Planner Board of Standards, Inc.;
  • CIC – Chartered Investment Counselor, granted by the Investment Counsel Association of America;
  • PFS – Personal Financial Specialist administered by the American Institute of Certified Public Accounts;
  • CIMC – Certified Investment Management Consultant, granted by the Institute for Investment Management Consultants; and
  • CIMA – Certified Investment Management Analyst, granted by the Investment Management Consultants Association.

Before attempting to determine whether a state will recognize these designations in lieu of an IAR’s licensing requirements, it is important first to identify the states in which the IAR intends to conduct IA business from as well as the states in which the IAR has or expect to have clients.  Once the applicable states are identified, it should be possible to then determine the specific licensing requirements or available waivers/exemptions.

Note Regarding Supervisory Personnel:

In the IA world as opposed to a BD, things are much simpler in terms of licensing from a supervisory standpoint.  There are not any “supervisory” exams/licenses for IARs like there are for registered representatives (“RR”) of a BD.  The investment advisory activities of a firm do not require any specific supervisory licensing, however, any individual meeting the definition of an IAR in the particular state jurisdictions in which he/she operates, would typically have to satisfy some licensing requirement (Series 65 or Series 66) or qualify for one of the waivers/exemptions described above. 

A handful of states will ask for an IA firm to identify an individual as a “designated supervisor” on behalf of the firm for its investment advisory activities, however, no additional testing/qualifications are typically required for that person.  Do not let this cloud the issue for you from a BD licensing perspective.  For a firm that is registered as a BD, there are a handful of BD supervisory licenses/exams (Series 4, Series 24, Series 26, Series 27, Series 53, etc.) that may be required because of a firm’s BD-related activities, however, even though a firm’s BD-related activities may require it to have supervisory licensed individuals for those BD activities, the firm’s IA activities alone would not generally mandate those licenses. 

Recap:

Firm is an IA Only

Firm is an IA and a BD

Firm is a BD Only

No supervisory license(s)

No supervisory licenses for IA business, HOWEVER, BD business would require supervisory licenses (Series 24, Series 26, etc.)

BD business would require supervisory licenses (Series 24, Series 26, etc.)


Dual Association (BD and IA)

It is important to note that if an IAR is also registered as an RR with a BD, the registration process as an IAR is separate than the process for registering as an RR.  Even if the firms are affiliated or if a firm is dually registered as both an IA and a BD, registering as an IAR does not automatically register the person as an RR also.  IARs and RRs must satisfy separate licensing requirements. 



  Solicitor Arrangements


Solicitor Arrangements

Under certain circumstances, IAs may be able to pay outside parties for client referrals.  Prior to entering into such an arrangement, the IA must typically sign a “solicitor agreement” with the referring party that details the nature of the relationship and the compensation arrangement involved.  Additionally, depending on the circumstances of the referral, the referring party may need to furnish the potential client with a “solicitor brochure” that describes the solicitor arrangement.

Depending on state law, the referring party may need to become registered as an IAR of the firm prior to being compensated for client referrals or seek its own registration as an IA. 

Proxy Voting

IAs may vote proxies on behalf of their clients.  Additional written procedures need to be in place and the firm needs to maintain and make certain proxy-related records available to its clients and regulators upon request.

Custody

IAs may have custody over client assets.  Custody is not necessarily confined to physically housing client funds or securities.  An IA may be deemed to have custody in any of the following situations:

  • The IA has the ability to directly withdraw advisory fees from client accounts;
  • The IA has check-writing authority over client’s bank accounts; and
  • The IA is also the General Partner (or Managing Member) in an investment-related limited partnership (or limited liability company) (i.e. hedge fund).

Depending on the firm’s primary regulator (SEC or home state), certain additional requirements may apply to IAs that have custody of client assets.  Examples of such requirements include, but are not limited to:

  • An increased net capital requirement;
  • An annual surprise audit by a CPA; and
  • Sending periodic statements to clients pertaining to the assets over which the firm has custody.

Wrap Programs

Many advisers participate in wrap fee programs.  A “wrap fee program” is a program that offers participants a suite of services such as asset allocation; portfolio management; trade execution; and certain administration activities, all for a single fee – typically an annual percentage of the client’s total assets under the investment adviser’s management.  In such a program, the client would not pay a separate fee for brokerage or execution fees (i.e. transaction fees).  A wrap fee program is designed to assist clients in obtaining professional asset management services for a convenient single "wrapped" fee. 

Rule 204-3(f) under the Advisers Act requires a sponsor of a wrap fee program to prepare a "wrap fee brochure" that provides, in narrative form, a full explanation of the program and its sponsor, and to deliver the wrap fee brochure to wrap fee clients. 

An investment advisory program under which all clients pay traditional, transaction-based commissions would generally not be considered a wrap fee program.  Similarly, a program under which client assets are allocated among mutual funds may not be considered a wrap fee program if there would normally not be a charge to the client for the individual trades involved in the allocation process. 

Schedule H to Form ADV sets forth the information required in the wrap fee brochure. The wrap fee brochure must be prepared by the "sponsor" of the wrap fee program, i.e. the person that, for a portion of the fee, sponsors, organizes, or administers the program or recommends portfolio managers under the program. Some wrap fee programs will have more than one sponsor, in which case only one of the sponsors, as selected by the
sponsors, needs to prepare the wrap fee brochure.

An investment adviser providing portfolio management services to wrap fee clients is not a sponsor unless it performs other duties that would cause it to fall within the definition.

Wrap fee programs and other discretionary advisory programs that provide similar advice to a number of clients should be structured in a manner designed to avoid the creation of an unregistered investment company. The Commission has adopted Rule 3a-4 under the Investment Company Act of 1940 to provide a non-exclusive safe harbor from the definition of an investment company for advisory programs that meet certain requirements.  In other words, an improperly structured wrap program may create a registration requirement for the program as an “investment company” under the Investment Company Act of 1940.




  What CMC services are included in the registration process?


  • Preparation and submission of IARD entitlement paperwork.

  • Preparation of the Form ADV Preparation and submission of all necessary SEC or state RIA application materials for up to three (3) jurisdictions (i.e. SEC plus two state notice filings or firm's home state plus two additional states).

  • Preparation of the initial Schedule F disclosures.

  • Preparation of the Client Advisory Agreement (CMC does not offer legal or tax advice).

  • Preparation and filing of initial Form U4s for two (2) individuals.

  • Respond to SEC or state information requests regarding the application.



  What are the fees charged by the IARD system for an SEC Investment Adviser Registration?

Assets Under Management Initial Set-Up Fee Annual Fee
Under $25 Million
$150
$100
$25 Million - $100 Million
$800
$400

Over $100 Million

$1100
$550

Regulatory filing fees are subject to change without notice.

  What are the IARD System Regulatory Filing Fees for investment adviser representatives?


Initial Setup Fee: $45

This one-time fee is charged when your firm transitions an existing investment adviser representative onto the IARD system to create and electronic record of his/her registration.

For a new registrant, this one-time fee is charged when your firm electronically files a U-4 for the new investment adviser representative.

Annual Fee: $45 This fee is charged once a year during the IARD renewals program for each investment adviser representative with your firm and covers all electronic filing activity for the next year.
Transfer Fee: $45 This fee is charged when an investment adviser representative changes his/her registration from one firm to another via the IARD system.

Regulatory filing fees are subject to change without notice.

 

 

 


©1999 Capital Markets Compliance®. All Rights Reserved.

Our Banking division offers hourly consulting and auditing services concerning interest rate risk modeling, value-at-risk (VAR) methodology, independent risk management reviews, investment portfolio products, liquidity products, derivatives products, and securitization products. We can provide training in market and liquidity risk management to senior management, board of directors, and internal auditors.



©1999 Capital Markets Compliance®. All Rights Reserved.

Our FINOP/CFO division has experienced Financial and Operations Principals available on an interim or permanent basis. We have accountants that are engaged as broker-dealers' series 27 or 28 FINOP's and CFO's for multiple type of broker-dealer firms including small to, fortune 500 companies, banks and credit unions. Each of our accountant that registers with a firm as a principal, whether it is financial or otherwise is placed in a position of responsibility to that firm and themselves, both of which would suffer the consequences should regulatory actions be taken upon the firm. With that thought in mind, we have created a work methodology that ensures compliance with financial regulations, as well as provide for some general compliance help when the accountant feels the need to interject an opinion with regards to the firm's business practices.

We visualize a compliant firm, whether that means compliant with financials, business product types, or sales practices, to be one that keeps the firm's principals and representatives protected and therefore the clients/customers. We also understand how important it is for Firms to compare service providers and make sure that you are receiving the best possible FINOP service. As a result, we have created the following comparison checklist. Please use the following checklist as a guide to make sure that your FINOP is complying with rules and regulations.

Financial and Operational Principal (FINOP) Service Comparison Checklist
CMC will perform
Comp 1
Comp 2
Financial Preparation:      
Preparation of your firm's balance sheet and income statement. On a monthly basis, CMC will prepare your financials from scratch. CMC will enter all the financial information into an online accounting system and produce the balance sheet, income statement, trial balance, cash receipts journal, cash disbursements journal, general journal, general ledger, and account reconciliation(s).
Compute your net capital on a monthly basis and, if required, prepare haircut calculations and inventory schedule. We will compute your net capital on a monthly basis as well as CMC discuss, with the Firm's principal, the net capital rules. Ongoing discussions and monitoring is important since the Firm has to be in net capital compliance on a daily basis.
Monthly or Quarterly FOCUS report filing. Upon each calendar quarter, and monthly if required, CMC will electronically submit the firm's FOCUS Report X17a-5 by the 17th business day of the quarter or month following the period.

CMC will post the balance sheet, income statement, trial balance, cash receipts journal, cash disbursements journal, general journal, general ledger, account reconciliation(s), net capital computation, haircut calculation, inventory schedule, and FOCUS report onto our web storage database for downloading no later than 17th business day of the month. You will be provided with a User ID and Password along with instructions on how to access your information. The financial information will remain in our storage database for twelve (12) months, it is the responsibility of the firm to save and print copies for their records.

The designated FINOP will have a lengthy discussion with the Firm's principal concerning the preparation of the financials and the net capital computation for the month. The following information will be covered in detail:

  • Allowable Assets
  • Non-Allowable Assets
  • Aggregate Indebtedness
  • Liabilities of the broker-dealer
  • Expense Sharing and Service Agreements and how they influence regulatory accounting
  • Net Capital Computation
  • AI/NC ratios for new firms vs. older firms
  • Minimum Requirements
Extra services provided in conjunction with FINOP Services:      
FINOP Yearly Required Visit per NTM 06-23
Regulatory Continuing Education - CMC will ensure that the registered representatives have completed their FINRA regulatory continuing education requirement. CMC will obtain reports from the CRD system on a monthly basis. (Under 15 representatives included. Additional fees for firm with more than 15 representatives).
Fiscal year Audit - CMC will communicate directly with the auditor and will be the primary source for providing the auditor with requested financial items. CMC will review the audit prepared by the auditors and make sure it complies with SEC rules and regulations.

CMC will ensure that original audit reports and oath/affirmation pages are sent to the appropriate jurisdictions and SRO's.

Publicly traded broker-dealers must ensure their accountants are registered with Public Company Accounting Oversight Board. Reference: http://www.sec.gov/rules/other/34-48281.htm

SIPC - Confirm your SIPC registration and complete SIPC assessment reports. SIPC registration database and SIPC member information
Fidelity Bond - CMC will ensure that the Firm fidelity bond is compliant at all times. Renew/update your fidelity bond. http://www.seaburyandsmith.com/
File Forms and Notifications:      
Send notification of the new FINOP to the FINRA.
Obtain entitlement to FINRA's Web-CRD and Form-Filing.
Ensure that the Form BD (Schedule A) for the Firm will be changed to reflect the appointment of the new FINOP/CFO.
File Form U4 for the FINOP/CFO and submit fingerprint cards to the FINRA.
Send notifications regarding FINRA Conduct Rule 3030 outside business activity (OBA).
Update the FINRA Contact Questionnaire to reflect the appointment of the new FINOP/CFO (FINRA Contact System)
We will conduct a thorough review to make sure that the Firm's financials are prepared in accordance with GAAP and SEC/FINRA rules and regulations. Below are some of the items that we will review:      
Check your clearing agreement to make sure it has all required elements that apply to the Financial Statements.

If your firm has a parent company that pays certain expenses on behalf of the broker-dealer, we will make sure to have an Expense Sharing Agreement in place that complies with NTM 03-63.

Check your firm's operating agreements or bylaws for obligations to transfer cash, other assets, or equity interests to other parties upon the death or retirement of a shareholder to make sure it complies with NTM 04-33.
Explain to the firm its responsibilities regarding deficits in Introduced Accounts NTM 05-38.

 



©1999 Capital Markets Compliance®. All Rights Reserved.

 

Our Accounting/Bookeeping division can prepare your firm's financial statements, pay your bills, and help you with payroll. We have many different types of financial packages and accounting solutions to fit your needs. Your firm's financial statements will be prepared by accounting professionals with financial industry experience.

Our professionals are experts on all complex net capital computations for broker-dealers, investment advisers, and other types of financial industry entities.



©1999 Capital Markets Compliance®. All Rights Reserved.

 

Capital Markets Compliance® (CMC) was established in June of 1999 and is a privately held limited liability company. After the Gramm-Leach-Bliley Act, financial market participants found themselves surrounded by the possibility of mergers, acquisitions, and creation of dynamic diversified institutions. We at CMC became aware of a market need for providing these diversified institutions with just-in-time-knowledge information that relates to multiple jurisdictions, products, and services. As a result, we created and continue to build a highly specialized Capital Markets team of securities industry consultants and support staff to provide to our clients the just-in-time-knowledge they need to expand their business. There is not a single firm in the market that provides as widely diverse a suite of services as we do. As a company, we are interested in advising on all capital markets related issues and becoming a single provider for your company's regulatory and business needs.

All of our consultants are experienced in the compliance arena from the broker-dealer, investment adviser, futures/commodities brokers/advisers, insurance, alternative investment products, and banking perspective and all of our consultants have worked as examiners with one or more regulatory agencies. Having been former regulators has not changed our views of how business should be run in a financial marketplace, but has directed our instincts for what regulators want and the compliance issues companies must manage. We have provided consulting for broker-dealers, investment advisors, banks, bank holding companies, hedge funds, and futures trading firms located around the world.

We do not outsource our work to independent contractors like some of our competitors. This enables us to ensure that our clients receive the best quality of service in the industry.


Click on the menu below to learn more About Us:

  CMC's Depth of Industry Experience


CMC consulting team and support personnel have combined financial industry consulting, regulatory, and business experience in excess of 50 years most held by its consultants. CMC consultants also have combined regulatory industry experience in excess of 15 years with various regulatory agencies.

CMC consultants, whether previously employed by a regulatory agency or who have industry experience with a broker-dealer or investment adviser, continue to constantly receive external and internal training on FINRA, SEC, and other self-regulatory organization rules and regulations.

CMC consultants may also become Financial and Operational Principals (“FinOp”) for newly established or existing broker-dealers.  This is due to our experience with operations, the regulations, bookkeeping, preparation of financial statements, and filing of such with the FINRA and SEC.  CMC consultants have to understand the use and flow of trade processing, compensation, and compliance systems to fulfill the responsibilities of their title as FinOp, with a broker-dealer. It is often a request from clients to have a CMC consultant come on-site to review and consult on trade order management and general ledger systems, methodologies, assumptions, and operations of such systems.  In addition to such services, CMC can also perform mock regulatory audits to help prepare its clients for on-site visits/examinations by the regulators.


  Geographic Footprint of CMC's Client Base


CMC is headquartered in Atlanta-Norcross, Georgia. The geographic footprint of CMC’s clients is international and also covers most of the United States. Our international clients engage us to help them with comply with U.S. securities rules and regulations when offering securities products to U.S. citizens and entities. We also have taken many of our international clients through FINRA's broker-dealer membership application process as well as investment adviser registration with the SEC and States. See the illustrations below (each dot represents a CMC client’s principal office).



  References


All of our client information is strictly guarded as confidential and as a result, references are available only upon request and after getting permission from our clients to use them as a reference.


  Our Management Team


Capital Marekts Compliance®
is operated and manage by a team of professionals that have a combined regulatory industry experience in excess of 15 years with various regulatory agencies.

  Karen L. Alvarez, CEO


Karen L. Alvarez
is CEO and founder of Capital Markets Compliance®, LLC (“CMC”).  She is actively involved in all broker-dealer services offered by CMC, as well as CMC’s corporate internal structure and business development.  Ms. Alvarez’s broker-dealer regulatory compliance, brokerage operations, management and accounting background stems from her previous experience as an FINRA examiner and from servicing CMC’s wide range of investment industry clients, both nationally and internationally.

Ms. Alvarez also participates as a Financial and Operational Principal in CMC’s Financial and Operations Principal program, whereby she acts as such a principal and the Chief Financial Officer for several broker-dealer firms that are members of FINRA and Nasdaq.

Industry Examinations/Qualifications

Series 7, 24, 27

Certified Regulatory Compliance Professional (“CRCP”)

Past Experience

Formerly, Ms. Alvarez worked as a Compliance Examiner at the FINRA Inc.’s Atlanta District office.  While with FINRA, she conducted routine examinations of FINRA member firms, assisted in bringing new members into the Association and provided occasional assistance to cause examiners.  While with FINRA, Ms. Alvarez also assisted the district with its ongoing training of new examiners.  She served as a mentor guiding new hires in the routine examination process. 

Education

Bachelors of Science - Finance - Florida Atlantic University (Boca Raton, Florida)

CRCP - University of Pennsylvania (FINRA Institute at Wharton Certificate Program)

Membership

National Society of Compliance Professionals

Area of Focus & Expertise:
Broker-Dealers
Mock Regulatory Audits (BD)
Anti-Money Laundering Regulations
Financial & Operations Principal





  E. Rick Alvarez, COO


Mr. Alvarez serves as for COO Capital Markets Compliance®. His primary responsibility involves the supervision of CMC’s accounting department, which is responsible for financial statement preparation for FINRA, AMEX, PCX registered broker-dealers, NFA and CFTC registered entities, CMC’s FinOp program and record keeping requirements.  These services include a range of activities such as the supervision of the creation of a new or existing broker-dealer’s financial statements in accordance with Generally Accepted Accounting Principles, as well as FINRA rules and SEC regulations, preparation of net capital reports, and electronic filing of FOCUS reports.  Mr. Alvarez also participates as a Financial and Operational Principal in CMC’s FinOp program, whereby he acts as such a principal and the Chief Financial Officer for broker-dealer firms that are members of FINRA.

Industry Examinations/Qualifications

Series 28

Certified Public Accountant, regulated by the State of Florida

Member of the American Institute of Certified Public Accounts (AICPA)

Past Experience

Formerly, Mr. Alvarez worked as a Capital Markets Specialist with the Federal Reserve Bank of Atlanta (FED).  While with the FED, he conducted routine Treasury Department examinations of large and community state-member banks throughout the United States, developed the Capital Markets surveillance database, which housed interest rate risk & securities data, and contributed articles published in the Capital Markets Update Newsletter.Mr. Alvarez was the FED Capital Markets specialist assigned to three of the largest 6th district state-member banks, as well as several multi-billion dollar banking institutions.  Part of his responsibilities were to analyze and assign a rating to inherent market and liquidity risks for the institution as well as to the bank’s risk management process.  A review of this kind begins with an evaluation of the bank’s overall business and an analysis of the balance sheet, income statement, and several internal risk measurements.  Several meetings are held with the CFO/Treasurer and Asset/Liability Management staff to gather a working knowledge of the key persons.  Then a rating must be placed on the management’s ability to identify, measure, monitor, and control the institution’s inherent risks through the risk management process.  The examination process included thorough reviews of the IRR measurement process.  This is a review of all measurement techniques and systems that identify the bank’s earnings and capital impact to an adverse fluctuation in market interest rates.

 

Education

 

Florida Atlantic University (Boca Raton, Florida)
B.A. Economics – (1994) with a concentration in Accounting and Finance


Area of Focus & Expertise:
Broker-Dealers
Bank Asset/Liability Management & Interest Rate Risk Modeling Audits
Financial & Operations Principal


 



 

 


 


©1999 Capital Markets Compliance®. All Rights Reserved.



 Our Corporate Headquarters is Located in Atlanta-Norcross, Georgia

We provide our services to Financial Services Firms located in the U.S. states/territories & Foreign Financial Services Firms located in other countries around the globe. Please click on About Us Tab above to get more specifics about our U.S. and international client base.

 

             Our physical address, U.S. Mail, and Package Delivery Address

 

 Capital Markets Compliance® LLC
 3525 Holcomb Bridge Rd
 Norcross GA 30092

United States of America


             General E-mail

 

   cmc@cmcompliance.com

If you e-mail us and we don't respond within 24 hours, please gives us a call at 770-263-7300. It is possible that your e-mail was filtered into  our junk e-mail server by mistake.

Thank you for considering Capital Markets Compliance®, LLC for your compliance needs.





©1999 Capital Markets Compliance®. All Rights Reserved.

 


Capital Markets Compliance® is always looking for candidates that possess excellent written and communication skills, are creative, efficient, and have great attention to detail. Our office environment is fast-paced and demands teamwork and mental flexibility and stamina. Organizational and scheduling/time management skills are critical for these positions. Please check web-site regularly for new job opportunities.

Company Overview:

The consulting staff of Capital Markets Compliance®, LLC specializes in providing regulatory guidance for firms participating in all areas of the capital markets. Our clients are involved in the full spectrum of the financial services industry: brokerage, investment advisory, banking, insurance, commodities, futures, and pooled investment vehicles (hedge funds, venture capital funds, private equity).

Our senior consultants have worked for FINRA, States Securities Division, and the Federal Reserve Bank. This regulatory experience represents the bedrock foundation of a core base of knowledge and experience that has allowed us to continually strengthen and expand our suite of service offerings to accommodate virtually any type and size of market participant in the financial services industry.

Current Opportunities:
(At this time we don't work with Independent Contractors. All positions are for employment with CMC)

  Associate Consultant / Consultant


We are seeking professionals with regulatory or compliance backgrounds in any of the capital market segments to join our consultants and our support staff in an effort to help our company continue its extraordinary growth pattern. We have positions open across several of our internal divisions.

Broker-Dealer · Investment Adviser · Alternative Investments (pooled investment vehicles, commodities, futures) · Insurance Licensing · Banking

For more information regarding this position and salary range please click here (PDF document).

E-mail resume to cmc@cmcompliance.com

Subject Line: Consultant.

Once your resume has been submitted, a member of the Human Resources staff will review it. We will contact you if further information is needed, or if an interview is requested.



  Accountants


Senior Managing Accountant the Accounting Consulting Department with the preparation and electronic filing of monthly regulatory financial reports for FINRA Member Broker-Dealers.   This includes reviewing/auditing financial statements, supporting schedules, and regulatory reports.   For more information regarding this position and salary range please click here (PDF document).

Assistant Staff Accountant the Accounting Consulting Department with the preparation of financial statements in accordance with Generally Accepted Accounting Principles and FINRA/SEC Regulations for Broker/Dealer clients. For more information regarding this position and salary range please click here (PDF document).

E-mail resume to cmc@cmcompliance.com

Subject Line: Senior Managing Accountant or Assistant Staff Accountant

Once your resume has been submitted, a member of the Human Resources staff will review it. We will contact you if further information is needed, or if an interview is requested.



Benefits

  Cafeteria Plan


CMC sponsors an employee benefit program known s a "Flexible Benefits Plan" (the "Plan") for employees. Under federal tax laws, it is also known as a "cafeteria plan". It is so called because it lets you choose from several different insurance and fringe benefit programs according to your individual needs. CMC provides you with the opportunity to use pre-tax dollars to pay for them by entering into a salary redirection arrangement instead of receiving a corresponding amount of your regular pay. This arrangement helps you because the benefits you elect are nontaxable; you save social security and income taxes on the amount of your salary redirection.


  Medical Coverage


CMC offers access to health care for the employee through Kaiser Permanente. Our plan is the Added Choice/Point-of-Service (POS). To search doctors/providers click here.


  Flexible Benefits Products


CMC offers access to Dental, Vision, Life, Accident, and other products offered through AFLAC.


  Flexible Spending Account Medical and Dependent Care (Pre-Tax Advantage Plan)


CMC offers access to receive income tax-free reimbursement for some or all of the employee unreimbursed "Eligible Medical Expenses" under the Medical Care Reimbursement Plan ("URM") and/or some or all of the employee work-related Dependent care expenses under the Dependent Care Reimbursement Plan ("DCC"). Under the URM and DDC, you purchase a specific level of reimbursement benefits and you provide a source of pre-tax funds to reimburse yourself for your Eligible Expenses.


  401(k) Plan


CMC offers access to participate in CMC's retirement trust 401(k) plan which include pre-tax contributions and after tax contributions to fund tax-free retirement income (Roth 401k). The plan also includes a discretionary CMC matching of participant contributions.


  Holidays


CMC observes Ten (10) paid holidays:

Martin Luther King Jr. Day · Washington's Birthday · Good Friday · Memorial Day · Independence Day · Labor Day · Thanksgiving Day · Friday after Thanksgiving · Christmas Day · New Year's Day.



  Paid Time Off (PTO)


Our policy provides time for compensated absences. PTO absences can be used for sick or vacation time. PTO days ranges from 10 to 22 days depending on job position.




Driving Directions

  Address and Map

 

eComplianceStore click here


©1999 Capital Markets Compliance®. All Rights Reserved.

 

Capital Markets Compliance Monitor click here


©1999 Capital Markets Compliance®. All Rights Reserved.

770.263.7300
ACE





 


Credit Card Bill Pay (Clients)


FINRA Web Sites:
FINRA Home Page
CRD Home Page
NYSE Manual
SEC Web Sites:
SEC Web-Site
SEC IA Public Disclosure
NFA & CFTC Web Sites:
NFA Home Page
NFA Easy File Financial Filing System (log in)
CFTC
BD Resources:
FINRA's Fidelity Bond & Insurance Program
Prometric Testing Center Information
Municipal Securites Rulemaking Board
Options Clearing Corp.


States Securities Division:


States Corporation Division:

IA Resources:
IARD Home Page
NASAA Home Page
AIMR Home Page
Exchange Web Sites: