FINRA Executive Describes Member Application Process

FINRA's Vice President of the Membership Application Program ("MAP") and Statutory Disqualification Program characterized the programs as both the "entry point" and "gatekeeper" for the securities industry. 

On a recent episode of FINRA Unscripted, Cindy Foster said the programs ensure that firms demonstrate that they are capable of complying with industry rules and regulations under FINRA's 14 standards of admission which include conduct, operational and financial requirements. She said the vetting process also includes reviewing the firm's disciplinary history, customer complaints and financial controls. 

Ms. Foster said that the MAP review process, as governed by the FINRA Rule 1000 series, applies equally to new member applications ("NMAs") as well as continuing member applications ("CMAs"). Ms. Foster said that for applications deemed low risk, such as simple ownership changes or firms dealing solely in private placements, MAP offers a fast-track review process which aims to complete reviews within 100 days for NMAs and 75 days for CMAs.

Ms. Foster encouraged firms to engage with MAP early in their planning processes. She highlighted the importance of "materiality consultations," both voluntary and mandatory, which can help firms determine whether planned business changes require a CMA. She said that these consultations can save time and resources by clarifying regulatory requirements before formal applications are submitted. For current members, Ms. Foster advised firms considering potential material changes to reach out to their risk monitoring analyst.