BROKER-DEALER REGISTRATION

Dilendorf Law Firm helps companies involved in sales digital assets, such as security tokens and other forms of cryptocurrencies, in going through the US federal and state registration as a broker-dealer. We assess the activities that may require registration and provide full support in obtaining and maintaining registration of a broker-dealer.

We also consult our clients in exploring possible alternatives to broker-dealer registration, including cooperation with already registered broker-dealers or becoming a successor of a registered broker-dealer. 

The US Securities Exchange Act of 1934 (the “Exchange Act”) defines a broker as “any person engaged in the business of effecting transactions in securities for the account of others.” Definition of a dealer covers a person that is “engaged in the business of buying and selling securities for his own account, through a broker or otherwise” but excludes persons who buy or sell securities for their own accounts but not as part of a regular business. Entities as well as individuals may be considered broker-dealers.

Broker-dealer definition is interpreted very broadly. Any intermediaries in securities transactions, with include sales of security tokens, generally, fall within the definition of a broker and must register as a broker with the SEC. They must additionally join a self-regulatory organization (such as FINRA or a registered national securities exchange).

Every ATS, crowdfunding platform, STO platform or security token issuer will face broker-dealer issues that may require registration of the company or its agents as broker-dealers. The registration process is meticulous, and a registered broker-dealer is subject to numerous due diligence and compliance requirements and obligations.

We advise on a broad range of broker-dealer registration issues, including:

• Registration as a broker-dealer;
• Possible structures alternative to broker-dealer registration;
• Regulatory compliance of a broker-dealer, including risk assessment, supervisory and reporting requirements.

Our comprehensive broker-dealer registration services include:

• Preparation of FINRA New Member Application (Form NMA);
• Preparation a detailed business plan and other required operational and financial disclosures and procedures;
• Preparation of written supervisory procedures;
• Preparation of AML policies and procedures;
• Training or procurement of a chief compliant officer (COO);
• Preparation to and attending with client the pre-membership interview with FINRA;
• Communications with the SEC;
• Advising on the company’s capitalization;
• Structuring relations with banks;
• State registration and filings in all 50 states plus US territories;
• Preparation of other forms, filings, disclosures and procedures to register an operational broker-dealer.

Resources:

SEC Guide to Broker-Dealer Registration

SEC Exemptions from Broker-Dealer Registration

Registration requirements for Non-Finra Broker Dealers and Salespersons

New York State Broker-Dealer and Securities Registration Information Sheet

California Broker-Dealers, State Investment Advisers and SEC Investment Advisers

Applying for Broker-Dealer Registration in Connecticut