Although broker-dealers register with both the SEC and the state administrator, the Series 66 focuses on the state registration process. For the rest of this broker-dealer registration section, the discussion is limited to the state process and the regulations that apply to it.
Once a registrant submits all required paperwork and meets the general requirements, the state administrator reviews the application.
These are the important items a broker-dealer must submit:
The state administrator reviews the documentation to decide whether registration will be granted. The Uniform Securities Act (USA) sets the general timing rule like this:
“If no denial order is in effect and no proceeding is pending… registration becomes effective on the 30th day after an application is filed, unless earlier made effective.”
In plain language, registration becomes effective on the 30th day after the application is filed, as long as there’s no denial order and no pending proceeding. This typically occurs at noon on the 30th day after filing (yes, the exam can be that specific). The phrase “unless earlier made effective” means the state administrator can make the registration effective sooner.
Once the state administrator expects registration to be granted, the administrator notifies the applicant (the broker-dealer). The administrator may also require the firm to publish a newspaper announcement about the application. The USA states:
“The [Administrator] may by rule or order require an applicant for initial registration to publish an announcement of the application in one or more specified newspapers published in this state.”
Whether the broker-dealer communicates its registration status in a newspaper, online, or in conversations with customers, the wording matters. The key term to use is effective registration. Once registration is effective, the broker-dealer may do business and operate legally in that state.
State administrators are especially concerned about firms “playing up” registration. Registration does not mean the state administrator approves, endorses, or guarantees the performance of a broker-dealer or any financial professional. For example, regulators would object to a newly registered broker-dealer posting a statement like this:
“Our registration and business have been approved by the state securities administrator, so you know your money is safe with us!”
If you’ve taken a FINRA exam (like the SIE, Series 6, or Series 7), you’ve seen the same idea at the federal level. The Securities and Exchange Commission (SEC) enforces similar rules. When a security is registered with the SEC, the issuer (and firms selling the security) can’t imply that the SEC has approved the security or endorsed the issuer.
Securities regulators act like referees in the markets: they enforce the rules, but they don’t “take sides.” Registration is simply the legal permission to operate. It doesn’t mean the regulator likes, endorses, or approves of the applicant.
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