Series 26: Broker-Dealer Notification Requirements

Broker-Dealer Notification Requirements

In addition, member firms have their own responsibilities to inform their regulators of any existing or impending net capital deficiencies. For example, when net capital falls below a firm’s required minimum or the firm becomes insolvent, that firm must notify both the SEC and FINRA of the deficiency that same day. The notification must specify the broker-dealer’s net capital requirement and its current amount of net capital.

Broker-dealers must notify both the SEC and FINRA within 24 hours after the occurrence of any one of the events below:

• • A computation made by a broker-dealer shows that its aggregate indebtedness is in excess of 1,200% of its net capital
• • A computation made by a broker-dealer that has elected the alternative method shows that its net capital is less than 5% of aggregate debit items
• • A computation made by a broker-dealer shows that its total net capital is less than 120% of its required minimum net capital
• • A computation made by a broker-dealer shows that the total amount of money payabl