A broker-dealer maintains its principal office in State A and has registered branch offices in States B and C. If the broker-dealer decides to close its branch office in State B, what action is required under the Uniform Securities Act?
- ANotify only the Administrator of State B.
- BNotify the Administrator of State A, State B, and FINRA.
- CNotify the Administrator of State A and State B.
- DNo notification is required as long as the principal office remains open.
Show answer & explanationAnswer & explanation
Correct answer: C. Notify the Administrator of State A and State B.
When a broker-dealer closes a branch office, it represents a material change to its registration information. Therefore, the Administrator of the state where the principal office is located (State A) and the Administrator of the state where the branch office is closing (State B) must be promptly notified. FINRA notification would also be required if the firm is FINRA-registered, but the question specifically asks under the Uniform Securities Act, which governs state registration.
Why the other options are wrong
- A. The home state Administrator (State A) also needs to be informed of material changes to the firm's operations.
- B. FINRA notification is for federal/SRO registration; the question asks about the Uniform Securities Act (state) requirements. While often done concurrently, it's not a USA requirement.
- D. Closing a branch is a material event requiring notification to relevant state Administrators.
BD Material Change Notification
Broker-dealers must promptly notify the Administrator(s) of any material changes to their registration information, including changes in office locations.
- Includes opening or closing branch offices.
- Notification to both home state and affected state Administrators.
- Ensures regulatory authorities have up-to-date information.
Memory trick: Any big change to the business needs administrator notification.