Part II. Broker-Dealer Agents
21VAC5-20-90. Application for registration as a broker-dealer agent.
A. Application for registration as an agent of a FINRA member shall be filed on and in compliance with all requirements of CRD and in full compliance with the forms and regulations prescribed by the commission. The application shall include all information required by such forms.
An application shall be deemed incomplete for registration as a broker-dealer agent unless the applicant submits the following executed forms, fee, and information:
1. Form U4.
2. The statutory fee made payable to FINRA in the amount of $40.
3. Evidence in the form of a FINRA exam report of passing within the two-year period immediately preceding the date of the application: (i) the Uniform Securities Agent State Law Examination, Series 63; (ii) the Uniform Combined State Law Examination, Series 66; or (iii) a similar examination in general use by securities administrators which, after reasonable notice and subject to review by the commission, the Director of the Division of Securities and Retail Franchising designates.
4. Any other information the commission may require.
B. Application for registration for non-FINRA member broker-dealer agents shall be filed on and in compliance with all requirements and forms prescribed by the commission.
An application shall be deemed incomplete for registration as a broker-dealer agent unless the applicant submits the following executed forms, fee, and information:
1. Form U4.
2. The statutory fee in the amount of $40. The check must be made payable to the Treasurer of Virginia.
3. Evidence in the form of a FINRA exam report of passing within the two-year period immediately preceding the date of the application: (i) the Uniform Securities Agent State Law Examination, Series 63; (ii) the Uniform Combined State Law Examination, Series 66; or (iii) a similar examination in general use by securities administrators which, after reasonable notice and subject to review by the commission, the Director of the Division of Securities and Retail Franchising designates.
4. Any other information the commission may require.
C. The commission shall either grant or deny each application for registration within 30 days after it is filed. However, if additional time is needed to obtain or verify information regarding the application, the commission may extend such period as much as 90 days by giving written notice to the applicant. No more than three such extensions may be made by the commission on any one application. An extension of the initial 30-day period, not to exceed 90 days, shall be granted upon written request of the applicant.
Statutory Authority
§§ 12.1-13 and 13.1-523 of the Code of Virginia.
Historical Notes
Derived from Rule 208, Case No. SEC810005, eff. July 1, 1981; amended by Case No. SEC840009, eff. July 2, 1984; Case No. SEC890040, eff. July 1, 1989; Case No. SEC900034, eff. July 1, 1990; Case No. SEC910057, eff. July 1, 1991; Virginia Register Volume 11, Issue 21, eff. July 1, 1995; Volume 13, Issue 25, eff. September 1, 1997; Volume 15, Issue 22, eff. July 1, 1999; Volume 17, Issue 20, eff. July 1, 2001; Volume 25, Issue 22, eff. July 1, 2009; Volume 29, Issue 20, eff. June 3, 2013; Volume 34, Issue 9, eff. December 1, 2017.
21VAC5-20-95. Employment of an agent by more than one broker-dealer.
A. In accordance with § 13.1-504 B of the Act, an agent may be employed by more than one broker-dealer if all of the following conditions are satisfied:
1. Each employing broker-dealer is under common ownership and control as defined in subsection B of this section or as provided in subdivision C 2 c under 21VAC5-20-330.
2. Each employing broker-dealer is registered in accordance with 21VAC5-20-10.
3. Each employing broker-dealer consents in writing to the employment of the agent by each of the other employing broker-dealers.
4. Each employing broker-dealer agrees to be responsible for the employment activity of the agent.
5. The agent is registered in accordance with 21VAC5-20-90 by and on behalf of each employing broker-dealer.
6. Each employing broker-dealer executes an Agent Multiple Employment Agreement (Form S.A.16), and the executed agreement is filed with the commission at its Division of Securities and Retail Franchising prior to the agent transacting business in Virginia on behalf of such broker-dealer.
7. A new Agent Multiple Employment Agreement is executed and filed with the commission at its Division of Securities and Retail Franchising within 15 days after any information in a current agreement on file with the commission becomes materially deficient, incomplete or inaccurate.
B. The term "common ownership and control" as used in this section means the same individual or individuals possess at least a 50% ownership interest in each employing broker-dealer.
Statutory Authority
§§ 12.1-13 and 13.1-523 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 23, Issue 23, eff. July 1, 2007; amended, Volume 29, Issue 20, eff. June 3, 2013.
21VAC5-20-100. Expiration.
The registration, and any renewals thereof, of a broker-dealer agent shall expire annually at midnight on the 31st day of December unless renewed in accordance with 21VAC5-20-110.
Statutory Authority
§ 13.1-523 of the Code of Virginia.
Historical Notes
Derived from Rule 209, Case No. SEC810005, eff. July 1, 1981; amended by Case No. SEC830011, eff. July 1, 1983; Case No. SEC840009, eff. October 5, 1984; Case No. SEC890040, eff. July 1, 1989.
21VAC5-20-110. Renewals.
A. To renew the registration or registrations of its broker-dealer agent or agents, a FINRA member broker-dealer will be billed by CRD the statutory fee of $40 per broker-dealer agent. A renewal of registration or registrations shall be granted as a matter of course upon payment of the proper fee or fees unless the registration was, or the renewal would be, subject to revocation under § 13.1-506 of the Code of Virginia.
B. A non-FINRA member broker-dealer shall file with the commission at its Division of Securities and Retail Franchising the following items at least 30 days prior to the expiration of registration.
1. Agents to be Renewed (Form S.D.4.A) accompanied by the statutory fee of $40 for each agent whose registration is to be renewed. The check must be made payable to the Treasurer of Virginia.
2. If applicable, Agents to be Canceled with clear records (Form S.D.4.B).
3. If applicable, Agents to be Canceled without clear records (Form S.D.4.C).
Statutory Authority
§§ 12.1-13 and 13.1-523 of the Code of Virginia.
Historical Notes
Derived from Rule 210, Case No. SEC810005, eff. July 1, 1981; amended by Case No. SEC840009, eff. October 5, 1984; Case No. SEC890040, eff. July 1, 1989; Virginia Register Volume 13, Issue 25, eff. September 1, 1997; Volume 29, Issue 20, eff. June 3, 2013; Volume 34, Issue 9, eff. December 1, 2017.
21VAC5-20-120. Updates and amendments.
A broker-dealer agent shall amend or update Form U4 as required by the "Amendment Filings" provisions set forth under "How to Use Form U4." All filings shall be made on CRD for agents of FINRA member firms or with the commission at its Division of Securities and Retail Franchising for all other broker-dealer agents.
Statutory Authority
§§ 12.1-13 and 13.1-523 of the Code of Virginia.
Historical Notes
Derived from Rule 211, Case No. SEC890040, eff. July 1, 1989; amended, Virginia Register Volume 17, Issue 20, eff. July 1, 2001; Volume 29, Issue 20, eff. June 3, 2013.
21VAC5-20-130. Termination of registration.
A. When a broker-dealer agent terminates his registration with a broker-dealer, or a broker-dealer terminates an agent's registration, the broker-dealer shall file notice of such termination on Form U5 within 30 calendar days of the date of termination. All filings shall be made on CRD for agents of FINRA member firms or with the commission at its Division of Securities and Retail Franchising for all other broker-dealer agents.
B. If an agent learns that the broker-dealer has not filed the appropriate notice, the agent may file notice with the commission at its Division of Securities and Retail Franchising. The commission may terminate the agent's registration if the commission determines that a broker-dealer (i) is no longer in existence, (ii) has ceased conducting securities business, or (iii) cannot reasonably be located.
Statutory Authority
§§ 12.1-13 and 13.1-523 of the Code of Virginia.
Historical Notes
Derived from Rule 212, Case No. SEC810005, eff. July 1, 1981; amended by Case No. SEC890040, eff. July 1, 1989; Case No. SEC910057, eff. July 1, 1991; Virginia Register Volume 17, Issue 20, eff. July 1, 2001; Volume 25, Issue 22, eff. July 1, 2009; Volume 29, Issue 20, eff. June 3, 2013.
21VAC5-20-135. Continuing commission by retiring agents.
The payment of compensation to a registered agent after he terminates his employment with a registered broker-dealer either by retirement, disability, death, or payment to his surviving spouse or other beneficiaries, will not be deemed to be a violation of commission regulations, provided the broker-dealer enters into a bona fide contract with either the retiring agent or the surviving spouse or beneficiaries, and the following conditions are met.
1. The retiring agent must have been continuously employed by or otherwise associated with the firm for a minimum of three years, as of the date of his retirement.
2. The sharing of commissions will be limited to commissions derived from accounts held for continuing customers of the retiring agent regardless of whether customer funds or securities are added to the accounts during the period after retirement.
3. The retiring agent must have demonstrated that he conducted himself in a manner exhibiting appropriate professional conduct. At a minimum, retirees must have been subject to no more than a low incidence of investment-related customer complaints and arbitrations settled or decided for more than $25,000 in the three years prior to the retirement date.
4. If the retiring agent has been subject to such complaints, the firm must have determined that the complaints did not require disciplinary action or heightened supervision, and that the retiree was not at fault for improper sales practices.
5. The retiring agent must not have been subject to a statutory disqualification during the three years prior to retirement.
6. The retiring agent must comply, to the extent applicable, with federal and state securities statutes and regulations, all policies, procedures, and rules of relevant regulatory and self-regulatory bodies, and must certify compliance with the policy at least annually.
7. The broker-dealer must establish parameters for a reasonable time period, not to exceed five years, following retirement and a percentage scale (that is either fixed or decreases the percentage the retiring agent receives each year) regarding the sharing of commissions by the retiring agent and the receiving registered agent.
8. The retiring agent must certify at least annually to the broker-dealer that he has adhered to the requirements and conditions of the agreement.
9. The broker-dealer must contact a representative sample of the account holders including a significant set of high grossing customer accounts subject to the agreement at least annually to confirm that the retiring agent has not provided investment advice or solicited trades in securities in any way. For example, the broker-dealer may contact annually: (i) holders of the top 10 highest grossing client accounts for that year and (ii) holders of one-half of the next 25% highest grossing client accounts.
Statutory Authority
§§ 12.1-13 and 13.1-523 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 25, Issue 22, eff. July 1, 2009.
21VAC5-20-140. Changing connection from one broker-dealer to another.
A broker-dealer agent who changes connection from one broker-dealer to another shall comply with 21VAC5-20-90.
Statutory Authority
§ 13.1-523 of the Code of Virginia.
Historical Notes
Derived from Rule 213, Case No. SEC810005, eff. July 1, 1981; amended by Case No. SEC840009, eff. July 2, 1984; Case No. SEC890040, eff. July 1, 1989.
21VAC5-20-150. Examination/qualification.
A. An individual applying for registration as a broker-dealer agent shall be required to show evidence of passing within the two-year period immediately preceding the date of the application: (i) the Uniform Securities Agent State Law Examination, Series 63; (ii) the Uniform Combined State Law Examination, Series 66; or (iii) a similar examination in general use by securities administrators which, after reasonable notice and subject to review by the commission, the Director of the Division of Securities and Retail Franchising designates.
B. Any individual who meets the qualifications set forth in subsection A of this section and is registered in any state jurisdiction requiring registration within the two-year period immediately preceding the date of the filing of an application shall not be required to comply with the examination requirement set forth in subsection A of this section, except that the commission may require additional examinations for any individual found to have violated any federal or state securities laws.
C. Any registered agent or agent in the process of applying for registration renewal shall further demonstrate his business knowledge by complying with the applicable continuing education requirements set forth in any of the following:
1. Rule 1250 of the FINRA By Laws, as such provisions existed on October 17, 2011;
2. Rule 345 A of the NYSE Rules, as such provisions existed on July 1, 1995;
3. Rule G-3(h) of the Municipal Securities Rulemaking Board, as such provisions existed on July 1, 1995;
4. Rule 341 A of the NYSE Market Rules, as such provisions existed on May 14, 2012;
5. Rule 9.3A of the Chicago Board of Options Exchange, Inc., as such provisions existed on July 1, 1995; or
6. Article VI, Rule 11 of the Chicago Stock Exchange, Inc., as such provisions existed on July 1, 1995.
Statutory Authority
§§ 12.1-13 and 13.1-523 of the Code of Virginia.
Historical Notes
Derived from Rule 214, Case No. SEC810005, eff. July 1, 1981; amended by Case No. SEC820019, eff. August 15, 1982; Case No. SEC890040, eff. July 1, 1989; Virginia Register Volume 11, Issue 21, eff. July 1, 1995; Volume 13, Issue 25, eff. September 1, 1997; Volume 15, Issue 22, eff. July 1, 1999; Volume 25, Issue 22, eff. July 1, 2009; Volume 29, Issue 20, eff. June 3, 2013.
21VAC5-20-155. Limited Canadian broker-dealer agent registration.
A. An agent of a Canadian broker-dealer who has no office or other physical presence in the Commonwealth of Virginia may, provided the broker-dealer agent is registered under this section, effect transactions in securities as permitted for a broker-dealer registered under 21VAC5-20-85.
B. Application for registration as a broker-dealer agent under this section shall be filed with the commission at its Division of Securities and Retail Franchising or such other entity designated by the commission on and in full compliance with forms prescribed by the commission and shall include all information required by such forms.
C. An application for registration as a broker-dealer agent under this section shall be deemed incomplete for purposes of applying for registration unless the following executed forms, fee, and information are submitted to the commission:
1. An application in the form required by the jurisdiction in which the broker-dealer maintains its principal place of business.
2. Statutory fee payable to the Treasurer of Virginia in the amount of $40 United States currency pursuant to § 13.1-505 G of the Act.
3. Evidence that the applicant is registered as a broker-dealer agent in the jurisdiction from which it is effecting the transactions.
4. Any other information the commission may require.
D. A broker-dealer agent registered under this section shall:
1. Maintain his provincial or territorial registration in good standing;
2. Immediately notify the commission of any criminal action taken against him or of any finding or sanction imposed on him as a result of any self-regulatory or regulatory action involving fraud, theft, deceit, misrepresentation or similar conduct.
E. A broker-dealer agent's registration under this section, and any renewal thereof, shall expire annually at midnight on the 31st day of December unless renewed in accordance with subsection F of this section.
F. To renew the registrations of its agents, a broker-dealer registered under this section shall file with the commission at its division the most recent renewal application, if any, filed in the jurisdiction in which the broker-dealer maintains its principal place of business, or if no such renewal application is required, the most recent application filed pursuant to subdivision C 1 of this section along with the statutory fee in the amount of $40 United States currency pursuant to § 13.1-505 G of the Act.
G. A Canadian broker-dealer agent registered under this section and acting in accordance with the limitations set out in this section is exempt from all other rules applicable to a broker-dealer agent except the anti-fraud provisions of the Act and the requirements set out in this section.
Statutory Authority
§§ 12.1-13 and 13.1-523.1 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 17, Issue 20, eff. July 1, 2001; amended, Virginia Register Volume 19, Issue 23, eff. July 1, 2003; Volume 31, Issue 25, eff. July 31, 2015; Volume 31, Issue 25, eff. July 31, 2015; Volume 34, Issue 9, eff. December 1, 2017.