Broker-Dealer Notification Requirements
As previously discussed, 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 tot