NASAA Series 63Regulation of Broker-Dealers and AgentsHard
Broker-Dealer Alpha acquires the entire retail brokerage business of Broker-Dealer Beta, which is currently registered in State M with eight months remaining in its registration cycle. Alpha intends to continue Beta's business without material change. Under the Uniform Securities Act's successor registration provisions, what is the most accurate description of how Alpha may become registered in State M?
- AAlpha cannot register until it has operated in State M for at least one full year
- BAlpha must wait until Beta's registration expires before filing any new application
- CAlpha may file an application, and if approved, may succeed to the unexpired portion of Beta's registration period
- DAlpha automatically inherits Beta's registration permanently with no filing required
Show answer & explanationAnswer & explanation
Correct answer: C. Alpha may file an application, and if approved, may succeed to the unexpired portion of Beta's registration period
Successor registration provisions allow a firm that succeeds to and continues the business of a registered broker-dealer to file an application to succeed to the predecessor's registration for the remainder of its effective period, subject to Administrator approval, rather than restarting the full annual cycle.
Why the other options are wrong
- A. There is no one-year operating prerequisite for successor registration.
- B. There is no requirement to wait for the predecessor's registration to lapse.
- D. Succession is not automatic or permanent; a filing is required.
Successor Broker-Dealer Registration
A firm that succeeds to and continues the business of a registered broker-dealer may file to succeed to the predecessor's registration for the unexpired portion of its term, rather than starting over.
- Applies when business is continued without material change
- Requires filing an application with the Administrator
- Registration runs only for the remainder of the predecessor's cycle, not a fresh full year
Memory trick: New owner, same clock, keep ticking.