In 2012, FINRA announced that it would begin charging a fee for continuing membership applications (or CMAs). Also, at that time, FINRA announced increases in the new member application (or NMA) fees. The FINRA CMA fee structure for both is based on a grid that appears in Section 4(i)(3) of Schedule A of the FINRA By-Laws. The problem here for FINRA is that for years it processed CMA applications (and spent considerable resources on some) without actually collecting any fees for this specific service. Wanting to recover some of the resources it was expending on CMAs, FINRA instituted these user fees in 2012.
The amount of the required FINRA CMA fee depends upon a tiered structure within each firm category (small, medium and large). And the tiers, for example, of a small firm are Tier 1, 2 and 3 where the first is 1-10 registered persons, the second is 11 – 100 and the third is 101 – 150. The fees within each tier for a small firm seeking to gain approval for a material change in business range from $5,000 to $15,000. For a large firm these fees range from $35,000 to $75,000. Some fees are simply a flat fee (no tiers) – for example there is a flat fee for an asset transfer of $5,000 for a small firm. Essentially, FINRA has aligned the fees with what it anticipates the amount of work required by its staff will be.
Then Comes the Clarification on FINRA CMA Fee Waivers
In 2013, acknowledging that there are certain circumstances in which CMAs should qualify for a fee waiver, FINRA issued guidance about what these circumstances are and how to apply for the waiver. Specifically, an applicant may be granted a FINRA CMA fee waiver where FINRA, “determines that the CMA is proposing less significant changes that do not require substantial staff review.” And FINRA went on to provide guidance suggesting that the applicant may qualify for a FINRA CMA fee wavier in the following instances:
- The proposed change does not make any, “day-to-day changes in the applicants business activities, management, supervision, assets or liabilities, and the applicant is only proposing a change in the:” applicant’s
legal structure (corporation to LLC), ownership structure (adding a holding company), and change of percentage ownership of existing owners with no disclosure or disciplinary issues within the last 5 years. - An asset transfer application in which there are no pending or unpaid settled customer related claims, or there are claims but an escrow has been established.
Obviously, the FINRA CMA fee-waiver eligibility circumstances are very limited. But in FINRA’s Regulatory Notice 13-11, it states that other changes may qualify based on the individual facts and circumstances of such a waiver request. And FINRA has granted waivers in other circumstances.
A FINRA CMA fee wavier request should be uploaded into the FINRA Gateway with the Form CMA, and specifically in the section covering Standard 1 of the application. There have been instances in which the waiver request was completed after the application was filed, however.
If you are considering filing a CMA, or if you would like to request a waiver of any FINRA CMA fee, contact Mitch Atkins, FINRA’s former Senior Vice President and Regional Director, a FINRA CMA expert who has extensive experience with the FINRA CMA process.
Contact Mitch Atkins, Principal, FirstMark Regulatory Solutions at 561-948-6511.
