A. Yes. The interpretation also applies in this case, even if the perceived problem that motivates the interpretation does not exist. Businesses that have generated revenue on the basis that the parent company bears most of the costs must check whether these fees are still tax acceptable and for other purposes, or whether the subsidiary should instead pay dividends to their parent company for amounts greater than the justified value of the services provided. Such payments would naturally be subject to the SEC`s capital withdrawal rules. 7. Dealers must maintain written fee-sharing agreements between the broker and a third party who has paid or agreed to an issue of a broker. The agreement must specify which party is required to bear each expense, whether the broker has a direct or indirect obligation to compensate a party for the payment of the fees or otherwise compensate it, and the type of award when the broker records the costs in a specified amount as a result of a third party allocation. FINRA provided guidance on cost-sharing agreements in a communication to members published in October 2003. This communication requires brokers to “establish a data set that reflects all expenses incurred for their business and any corresponding liability, whether a third party has agreed to bear the costs or liability.” 03-63 also emphasizes the broker`s obligation to keep records of these expenses or liabilities assumed by third parties, regardless of accounting treatment or the impact on net capital. All brokers should be aware of these requirements, as auditors and supervisory authorities have tightened their control, even with respect to the smallest expenses affecting financial statements. Both the SEC and FINRA outlined the relevant expectations of the brokers. 9.
A broker-trader must notify his DEA if he enters into or has entered into a fee-clearing agreement, and the broker does not account for all expenses incurred in the course of his business activities on reports to the SEC or his DEA in accordance with the financial liability rules. The notification must include the date of the agreement and the names of the contracting parties. The broker must provide a copy of the agreement to his DEA upon request. 03-63 sets out a number of fundamental principles in the development of fee allocation agreements: when a bearer broker uses the fully paid and surplus marginal securities of a PAB account holder under an existing account agreement and the holder of the PAB account objects to the use of these securities on the day or after the rule of use of these securities comes into force; What does the carrier broker need to do to meet the ownership or control requirements of the 15c3-3 rule? With respect to net capital issuance, 03-63 notes that third-party expenses and liabilities must be debts to the broker for net capital purposes, unless 6.