FINRA Manual: Contents
FINRA ManualConnected by Complinet
MEMBERSHIP AND REGISTRATION RULES (1000)
1000. MEMBERSHIP, REGISTRATION AND QUALIFICATION REQUIREMENTS
1020. Registration of Principals
|View Whole Section||Text only||Print Manager||Link|
1021. Registration Requirements
(a) All Principals Must Be Registered
All persons engaged or to be engaged in the investment banking or securities business of a member who are to function as principals shall be registered as such with NASD in the category of registration appropriate to the function to be performed as specified in Rule 1022. Before their registration can become effective, they shall pass a Qualification Examination for Principals appropriate to the category of registration as specified by the Board of Governors. A member shall not maintain a principal registration with NASD for any person (1) who is no longer active in the member's investment banking or securities business, (2) who is no longer functioning as a principal, or (3) where the sole purpose is to avoid the examination requirement prescribed in paragraph (c). A member shall not make application for the registration of any person as principal where there is no intent to employ such person in the member's investment banking or securities business. A member may, however, maintain or make application for the registration as a principal of a person who performs legal, compliance, internal audit, back-office operations, or similar responsibilities for the member or a person engaged in the investment banking or securities business of a foreign securities affiliate or subsidiary of the member.
(b) Definition of Principal
Persons associated with a member, enumerated in subparagraphs (1) through (5) hereafter, who are actively engaged in the management of the member's investment banking or securities business, including supervision, solicitation, conduct of business or the training of persons associated with a member for any of these functions are designated as principals. Such persons shall include:
(1) Sole Proprietors
(4) Managers of Offices of Supervisory Jurisdiction, and
(5) Directors of Corporations.
(c) Requirements for Examination on Lapse of Registration
Any person whose registration has been revoked pursuant to Rule 8310 or whose most recent registration as a principal has been terminated for a period of two or more years immediately preceding the date of receipt by the Association of a new application shall be required to pass a Qualification Examination for Principals appropriate to the category of registration as specified in Rule 1022 hereof.
(d) Application for Principal Status
(1) Any person associated with a member as a Registered Representative whose duties are changed by the member so as to require registration in any principal classification shall be allowed a period of 90 calendar days following the change in his duties during which to pass the appropriate Qualification Examination for Principals. Upon elevation, the member shall submit to NASD an amended "Uniform Application for Securities Industry Registration or Transfer" and the applicable fees. In no event may a person function as a Principal beyond the initial 90 calendar day period following the change in his duties without having successfully passed the appropriate Qualification Examination.
(2) Any person not presently associated with a member as a Registered Representative seeking registration as a Principal shall submit the appropriate application for registration and the required registration and examination fees. Such person shall be allowed a period of ninety days after all applicable prerequisites are fulfilled to pass the appropriate Qualification Examination for Principals. In no event may a person previously unregistered in any capacity applying for principal status function as a Principal until fully qualified.
(e) Requirement of Two Registered Principals for Members
(1) An NASD member, except a sole proprietorship, shall have at least two officers or partners who are registered as principals with respect to each aspect of the member's investment banking and securities business pursuant to the applicable provisions of Rule 1022. This requirement applies to persons seeking admission as members and existing members.
(2) Pursuant to the Rule 9600 Series, The Association may waive the provisions of subparagraph (1) in situations that indicate conclusively that only one person associated with an applicant for membership should be required to register as a principal.
(3) In addition to the provisions of subparagraph (1) above, an applicant for membership, if the nature of its business so requires, shall have at least one person qualified for registration pursuant to Rule 1022(b), (c) and (f).
Amended by SR-NASD-2003-24 eff. March 3, 2003.
Amended by SR-NASD-97-28 eff. Aug. 7, 1997.
Amended by SR-NASD-89-53 eff. Aug. 28, 1990.
Amended by SR-NASD-89-15 eff. June 8, 1989.
Amended by SR-NASD-78-16 eff. May 30, 1979.
Selected Notice: 03-20.