NASAA Series 63Regulation of Broker-Dealers and AgentsMedium
A broker-dealer registered in State X has a branch office in State Y. The broker-dealer decides to close its State Y branch office and consolidate operations in State X. Under the Uniform Securities Act, what is the required action concerning the State Y branch office registration?
- ANo action is required as the primary registration is in State X.
- BThe broker-dealer must notify the Administrator of State Y of the closure.
- CThe broker-dealer must file a notice of withdrawal of registration for the branch office with the Administrator of State Y.
- DThe broker-dealer must file a Form U5 for the branch office.
Show answer & explanationAnswer & explanation
Correct answer: C. The broker-dealer must file a notice of withdrawal of registration for the branch office with the Administrator of State Y.
When a broker-dealer ceases to conduct business in a state (e.g., by closing a branch office and not having another presence), it must file a notice of withdrawal of registration in that state. This formally terminates its registration there.
Why the other options are wrong
- A. Closing a branch and ceasing operations in a state requires formal notification to that state's Administrator.
- B. While notification is part of withdrawal, the formal process is filing a notice of withdrawal.
- D. Form U5 is used for terminating an agent's registration, not a branch office or a broker-dealer's state registration.
BD Withdrawal of Registration
A broker-dealer ceasing to conduct business in a state must file a notice of withdrawal of registration with that state's Administrator to formally terminate its registration.
- Required when ceasing operations in a state.
- Involves filing a notice of withdrawal.
- Administrator's approval is typically required for effectiveness.
Memory trick: When a BD exits a state, they must file a 'Withdrawal Notice' to close the door.