The Overview addresses, among other things, categories
of information and other factors that firms should consider when
assessing materiality of prospective business
initiatives.
Broker-dealers often ask us whether they must seek approval from
the Financial Industry Regulatory Authority (FINRA) to expand the
lines of business in which they are approved to engage. A
determination of whether approval is required for an expansion is
based on NASD Rule 1017 (Rule 1017) and can require filing a
Continuing Membership Application (CMA).1 A Materiality
Consultation with FINRA is a corollary to the CMA process and
sometimes a precursor thereto. A Materiality Consultation is a
voluntary process that can help a firm determine whether a CMA is
required and, in our experience, in many instances, allows a firm
to avoid the far more burdensome CMA. For the first time in more
than a decade, FINRA recently provided guidance in the form of an
overview (Overview) of the Materiality
