FINRA's Membership Application Program Explained

Michael Volpe

After spending a decade in finance, Michael Volpe has been a freelance investigative journalist since 2009. His work has been published locally in the Chicago Reader, Chicago Crusader, Chicago Heights Patch, and New City. Nationally, Volpe's work has appeared in a wide variety of publications including the Washington Examiner, the Daily Caller, Crime Magazine, the Southern Christian Leadership Conference Newsletter, and Counter Punch. Volpe has been recognized by whistleblowers as leading the charge in getting their stories out. His first book Prosecutors Gone Wild was published in October 2012, his second book The Definitive Dossier of PTSD in Whistleblowers was published in February 2013 and his third book Bullied to Death was published in August 2015.


FINRA’s Membership Application Program Explained

March 27, 2020

FINRA - Membership ApplicationMore than one hundred new potential firms apply each year with FINRA, the Financial Industry Regulatory Authority. Lisa Robinson is the senior director of FINRA’s Membership Application Program (MAP) and she was the most recent guest on FINRA’s podcast, Unscripted.

“MAP Group is a dedicated group that reviews each application or other membership matter that’s submitted to FINRA,” Robinson said.

She said her group consists of fifty people and FINRA receives approximately one hundred and twenty applications for a new firm which wants to become a FINRA member.

FINRA was formed in 2007 when the regulatory arms of the NYSE and the NASD merged; it is called a self-regulatory organization.

Robinson started with NASD as an examiner, she said, before becoming an associate director in the examination’s group.

She then moved over to the application’s group.

“I really wanted to make the application program group a risk based group, similar to the way we conduct what was then cycle examinations,” she said.

There are currently fourteen standards which her group looks at to determine if a firm is approved for admission.

Those standards, Robinson said, including: compliance, supervisory, operational, and financial systems.

“We’re also going to look at a firm’s regulatory and disciplinary history,” she said, “We’re going to look and see if the key principles of the firm, registered reps of the firm: what is their background. Do they have pending our outstanding arbitrations? Have there been adjudicated disciplinary proceedings against these principles? That’s what we want to look at.”

“We want to keep the bad actors out,” she said.

She continued, “We’re going to look to review to see that the firm has adequate capital to begin their business, the financial wherewithal to sustain their business, and the financial controls to sustain their business.”

Robinson also gave advice to prospective firms who are considering filing their application.

“It’s really important that you don’t file the application until you’re ready. So, I talk to a lot of firms and they tell me that from their perspective that the application process, for that to go smoothly, they need to really think about their business: how their business plan can demonstrate that they meet those standards of admission before they file.”

The registration is done online; for more information firms can go to this link.

FINRA notes this on its site for new firms ready to apply.

“To conduct securities transactions and business with the investing public in the United States, both firms and individuals must be registered with FINRA. Firms must apply and meet certain membership standards to become a FINRA-registered broker-dealer.

“Prior to applying please make sure you take time to review and understand all of FINRA’s substantive and procedural requirements. You can find them in the FINRA Rule 1000 Series and FINRA Rule 1014. We recommend that you also read this section of thoroughly, as well as the applicable FINRA and SEC rules in detail.

“In addition to filing the New Member Application (NMA) Form and applicable registration forms, you will also be required to provide supporting documentation that addresses how you will satisfy the Qualifications and Standards of Admission as well as other applicable statutory and regulatory requirements. FINRA will not begin reviewing your membership application until it is substantially complete, so it is important that you strictly adhere to specific deadlines during the process.”

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