Current through Register 2024 Notice Reg. No. 38, September 20, 2024
(a) For any broker-dealer that participates
in the Central Registration Depository ("CRD"), the application for a
certificate as a broker-dealer shall be filed as follows:
(1) INITIAL APPLICATION: The application for
a certificate as a broker-dealer pursuant to subsection (a) of Section
25211 of the Code and an amendment
to such application pursuant to Section
260.241.4 shall be filed upon Form
BD (Uniform Application for Broker-Dealer Registration,
17 C.F.R. §
249.501) in accordance with the form
instructions and by filing the form with CRD for transmission to the
Commissioner.
(A) An applicant that files an
application through CRD shall complete a Customer Authorization of Disclosure
of Financial Records, set forth in Section
260.231(i) of
these rules, and maintain the form in the applicant's books and records as
provided in Section
25241 of the Code. The applicant
shall provide the form to the Commissioner upon request.
(B) Upon reviewing the application, the
Commissioner may require the applicant to submit the following information:
1. A balance sheet as of a date within 45
days prior to the filing of the application, which need not be audited. If the
balance sheet is not audited, the applicant shall file, in addition, an audited
balance sheet as of the end of applicant's last fiscal year.
2. A calculation of the net capital and the
ratio of net capital to aggregate indebtedness of the applicant, in accordance
with Section
260.216.12 of these rules, as of
the same date as the balance sheets submitted under paragraph (B)1.
above.
3. Copies of all currently
effective subordination agreements. If any are substantially similar, attach
one copy of the most standard form(s) and a schedule(s) showing the name and
address of each lender and the dollar value of the subordinated items on each
agreement.
(C) The
Commissioner may request additional information, documentation or detail
pertaining to Form BD (Uniform Application for Broker-Dealer Registration,
17 C.F.R. §
249.501) to be filed directly with the
Commissioner.
(2) FILING
FEE: The fee for filing an initial application is $300 as prescribed in Section
25608(o) of the
Code. The applicant shall remit the fee directly with CRD in accordance with
its procedures for transmission to the Commissioner. Fees are not refundable
except pursuant to Section
250.15 of these rules.
(3) COMPLETION OF FILING: For the purposes of
Section 250.51, an application for a
certificate as a broker-dealer is not deemed filed until the required fee and
all required submissions are received by the Commissioner. The filing of Form
BD (Uniform Application for Broker-Dealer Registration,
17 C.F.R. §
249.501) with CRD does not constitute
automatic approval. The broker-dealer shall not consider the application
approved until approved by the Commissioner and the approval is received
through CRD.
(b) For any
broker-dealer that does NOT participate in the CRD, the application for a
certificate as a broker-dealer shall be filed as follows:
(1) INITIAL APPLICATION: The application for
a certificate as a broker-dealer pursuant to subsection (a) of Section
25211 of the Code and an amendment
to such application pursuant to Section
260.241.4(a) of
these rules shall be filed upon Form BD (Uniform Application for Broker-Dealer
Registration, 17 C.F.R.
§
249.501) in accordance with the form
instructions and by filing the form directly with the Commissioner at the
Department of Business Oversight, 1515 K Street, Suite 200, Sacramento, CA
95814-4052. In addition to Form BD, the application shall include the
additional documentation prescribed in subsections (b)(1)(A) through (b)(1)(D)
of this rule.
(A) Financial Statements:
1. Attach a balance sheet as of a date within
45 days prior to the filing of the application, which need not be audited. If
the balance sheet is not audited, the applicant shall file, in addition, an
audited balance sheet as of the end of applicant's last fiscal year.
2. Attach a calculation of the net capital
and the ratio of net capital to aggregate indebtedness of the applicant, in
accordance with Section
260.216.12 of these rules, as of
the same date as the balance sheets submitted under paragraph (A)1.
above.
3. Attach copies of all
currently effective subordination agreements. If any are substantially similar,
attach one copy of the most standard form(s) and a schedule(s) showing the name
and address of each lender, and the dollar value of the subordinated items on
each agreement.
4. Furnish the date
applicant's fiscal year ends.
5.
Furnish applicant's minimum net capital requirement.
A broker-dealer registered pursuant to Section
15 of the Securities Exchange Act
of 1934 may file a copy of its most recent annual report of financial condition
and its most recent quarterly financial report required under
17 CFR
240.17a-5 in lieu of paragraphs (A)1. and
(A)2. above.
(B)
Organizational Information and Other Exhibits.
1. If applicant is a corporation, attach
copies of articles, by-laws, amendments and certification.
2. If applicant is a partnership, attach
partnership agreement and amendments.
3. If applicant is a limited liability
company, attach copies of its articles of organization and
amendments.
4. If applicant will
conduct business under a fictitious name, attach a certified copy of the
Fictitious Business Name Statement required by Business and Professions Code
Section
17910.
5. Attach a completed Customer Authorization
of Disclosure of Financial Records, set forth in Section
260.231(i) of
these rules.
(C) Exhibits
Required by Applicants Not Registered Under The Securities Exchange Act of 1934
(15 U.S.C.
78a et seq.) or Applicants Whose Agent
Records are not on File with CRD.
1. Attach a
statement demonstrating compliance with the examination requirements of Section
260.217 of these rules.
2. Attach fingerprint information pursuant to
California Penal Code Section
11077.1 for
each person listed on Schedule A, B or C of Form BD (Uniform Application for
Broker-Dealer Registration, 17 C.F.R. §
249.501).
(D) The Commissioner may request additional
information, documentation or detail pertaining to Form BD (Uniform Application
for Broker-Dealer Registration,
17 C.F.R. §
249.501) to be filed with the
Commissioner.
(2) FILING
FEE: The fee for filing an initial application is $300 as prescribed in Section
25608(o) of the
Code. Checks shall be made payable to the DEPARTMENT OF BUSINESS OVERSIGHT.
Fees are not refundable except pursuant to Section
250.15 of these rules.
(3) COMPLETION OF FILING: For the purposes of
Sections 250.51 of these rules, an
application for a certificate as a broker-dealer is not considered filed until
the required fee and all required submissions are received by the
Commissioner.
(c)
AMENDMENTS TO FORM BD: Any amendments to Form BD (Uniform Application for
Broker-Dealer Registration, 17 C.F.R. §
249.501) shall be
filed pursuant to Section
260.241.4 of these
rules.
(d) ANNUAL ASSESSMENT: The
annual assessment shall consist of the fee prescribed in Section
25608(o) of the
Code. The minimum assessment of $75 shall be filed through CRD in accordance
with its procedures by the 31st of December for transmission to the
Commissioner. This fee shall keep the certificate in effect for an additional
period. Broker-dealers not filing through CRD shall pay the minimum assessment
of $75 directly to the Commissioner by the 31st of December.
(e) SUCCESSIONS: In the event that a
broker-dealer succeeds to and continues the business of a broker-dealer holding
a current certificate, both the predecessor broker-dealer and the successor
broker-dealer shall follow Rule 15b1-3 under the Securities Exchange Act of
1934 (17 C.F.R. § 240.15b1-3) for the filing
of Form BD (Uniform Application for Broker-Dealer Registration,
17 C.F.R. §
249.501), an amendment to Form BD, or Form
BDW (Uniform Application for Broker-Dealer Withdrawal,
17 C.F.R. §
249.501a), as applicable. Form BD shall be
filed in the manner set forth in subsection (a) or (b) of this section, as
applicable. An amendment to Form BD shall be filed in the manner set forth in
subsection (c) of this section. Form BDW shall be filed in the manner set forth
in Section
260.242 of these rules.
(f) The following notices required by state
and federal law are hereby incorporated as part of any uniform form:
NOTICES REQUIRED UNDER STATE AND FEDERAL LAW
INFORMATION PRACTICES ACT OF 1977 (California Civil Code Section
1798.17)
(a) The Department of Business Oversight of
the State of California, Securities Regulation Division, is requesting the
information specified in the application for registration, qualification, a
certificate or a license.
(b) The
Chief Administrative Officer, the Department of Business Oversight, 1515 K
Street, Suite 200, Sacramento, CA 95814, telephone (916) 445-5541, is
responsible for the system of records and shall, upon request, inform
individuals regarding the location of the Department of Business Oversight's
records and the categories of persons who use the information in the
records.
(c) The records are
maintained pursuant to the Corporate Securities Law of 1968 (Corporations Code
Section
25000,
et seq.).
(d) The submission of all
items of information is mandatory unless otherwise noted. The Department of
Business Oversight is required to collect from all applicants social security
numbers under Family Code Section
17520, and
social security numbers or federal taxpayer identifcation numbers under
Business and Professions Code Section
494.5.
The Privacy Act of 1974 prohibits a state agency from denying an individual any
right, benefit or privilege provided by law because of the individual's refusal
to disclose the individual's social security account number.
(e) Failure to provide all or any part of the
information requested may preclude the Department of Business Oversight from
approving the application.
(f) The
principal purposes within the Department of Business Oversight for which the
information is to be used are to determine whether (1) a license,
qualification, registration, certificate or other authority should be accepted,
granted, approved, denied, revoked or limited in any way; (2) business entities
or individuals licensed or otherwise regulated by the Department of Business
Oversight are conducting themselves in accordance with applicable laws; and/or
(3) laws administered by the Department of Business Oversight are being or have
been violated and whether administrative action, civil action, or referral to
appropriate federal, state or local law enforcement or regulatory agencies, or
to a self-regulatory organization, as authorized by law, is
appropriate.
(g) Any known or
foreseeable disclosures of the information pursuant to subdivision (e) or (f)
of Civil Code Section
1798.24 may
include transfers to other federal, state, or local law enforcement or
regulatory agencies, or to a self-regulatory organization, as authorized by
law.
(h) Subject to certain
exceptions or exemptions, the Information Practices Act grants an individual a
right of access to personal information concerning the requesting individual
that is maintained by the Department of Business Oversight.
FEDERAL PRIVACY ACT OF 1974 (Public Law
93-579)
In accordance with Section
7 of the Privacy Act of 1974
(found at 5 U.S.C. §
552a note (Disclosure of Social Security
Number)), the following is information on whether the disclosure of a social
security account number is voluntary or mandatory, by what statutory or other
authority such number is solicited, and what uses will be made of it.
(1) The Department of Business Oversight is
required to collect from all applicants social security numbers under Family
Code Section
17520, and
social security numbers or federal taxpayer identification numbers under
Business and Professions Code Section
494.5.
The Privacy Act of 1974 prohibits a state agency from denying an individual any
right, benefit or privilege provided by law because of the individual's refusal
to disclose the individual's social security account number.
(2) A social security account number or
federal taxpayer identification number is solicited pursuant to one or more of
the following authorities: Sections
25210,
25211,
25230,
25230.1,
25231,
and
25241 of
the Corporations Code; Sections
260.211,
260.211.1,
260.231,
260.231.2,
260.236.1, and
260.236.2 of Title 10, California
Code of Regulations; Section
17520 of the
Family Code; and Section
494.5
of the Business and Professions Code.
(3) For all persons disclosing a social
security account number or federal taxpayer identification number, the number
is used to match the information to the names on the list provided by the
Department of Child Support Services under Family Code Section
17520, and the
lists of tax delinquencies provided by the State Board of Equalization and the
Franchise Tax Board under Business and Professions Code Section
494.5
The social security number may be used, in addition to other information
provided, to conduct a background investigation of the individual by the
Department of Justice's Identification and Information Branch or by other
federal, state or local law enforcement agencies, or a self-regulatory
organization, as authorized by law. The social security number may also be used
to respond to requests for this number made by child support agencies.
NOTICES REGARDING TAXPAYER
INFORMATION
(4) The
State Board of Equalization and the Franchise Tax board are authorized to share
taxpayer information with the Department of Business Oversight and in the event
the state tax obligation is not paid by a certificate holder after a
certificate is issued, the Department of Business Oversight may be required to
suspend the certificate.
1. Amendment
filed 6-18-76 as an emergency; effective upon filing. Certificate of Compliance
included (Register 76, No. 25). For prior history, see Register 76, No.
18.
2. Amendment of subsection (b), Part II-A, Items II and VII, and
Part II-B, No. 2 filed 11-14-78; effective thirtieth day thereafter (Register
78, No. 45).
3. Amendment filed 11-29-79 as an emergency; designated
effective 1-1-80. Certificate of Compliance included (Register 79, No.
48).
4. Repealer and new section filed 1-3-84 as an emergency;
effective upon filing (Register 84, No.2). A Certificate of Compliance must be
transmitted to OAL within 120 days or emergency language will be repealed on
5-3-84.
5. Amendment filed 4-27-84; effective thirtieth day
thereafter (Register 84, No. 18).
6. Editorial correction repealing
4-27-84 order and readopting 1-3-84 text filed 5-7-84 (Register 84, No.
18).
7. Certificate of Compliance as to 1-3-84 order transmitted to
OAL 4-27-84 and filed 5-29-84 (Register 84, No. 22).
8. Amendment
filed 12-19-85 as an emergency; designated effective 1-1-86 (Register 85, No.
51). A Certificate of Compliance must be transmitted to OAL within 120 days or
emergency language will be repealed on 5-1-86.
9. Certificate of
Compliance transmitted to OAL 4-10-86 and filed 5-8-86 (Register 86, No.
19).
10. Change without regulatory effect filed 3-2-89 (Register 89,
No. 11).
11. Change without regulatory effect amending subsection
(b) Part I and Part IV filed 11-19-93 pursuant to title 1, section
100, California Code of
Regulations (Register 93, No. 47).
12. Change without regulatory
effect amending subsection (b) filed 2-16-95 pursuant to section
100, title 1, California Code of
Regulations (Register 95, No. 7).
13. Amendment of section and NOTE
filed 1-23-2001; operative 1-23-2001 pursuant to Government Code section
11343.4(c)
(Register 2001, No. 4).
14. Amendment of section heading, section
and NOTE filed 3-27-2003; operative 4-26-2003 (Register 2003, No.
13).
15. Change without regulatory effect amending subsection
(b)(1)(C)2. and amending NOTE filed 11-23-2005 pursuant to section
100, title 1, California Code of
Regulations (Register 2005, No. 47).
16. Amendment of subsections
(a)(1)(A), (b)(1)(B)5. and (e) and amendment of NOTE filed 9-24-2009; operative
10-24-2009 (Register 2009, No. 39).
17. Amendment of subsections
(b)(1), (b)(2) and (e), new subsection (f) and amendment of NOTE filed
1-7-2014; operative 1-7-2014 pursuant to Government Code section
11343.4(b)(3)
(Register 2014, No. 2).
Note: Authority cited: Sections
25211
and
25610,
Corporations Code. Reference: Sections
31
and
494.5,
Business and Professions Code; Section
1798.17, Civil
Code; Sections
25210,
25211,
25216,
25217,
25241,
25608,
25612.3,
25612.5
and
25613,
Corporations Code; Section
17520, Family
Code; and Section
11077.1, Penal
Code.
