Branch Offices

In Wisconsin, a branch office of a broker-dealer is defined as any branch office, sales office or office of supervisory jurisdiction registered under the rules of any national securities exchange or national securities association of which the broker-dealer is a member. (s. DFI-Sec 1.02(7)(a), Wis. Adm. Code) The definition of branch office for purposes of the NASD can be found in the NASD Conduct Rule 3010(g). NASD Manual Online.

If any location of the broker-dealer meets the definition of branch office, you must file a notice with the Division designating that office location as a branch office. Changes to the NASD definition of branch office in 2005 will cause many locations previously exempt from the filing requirement to now be filed as a branch with both the NASD and the Division. Of significance, the NASD now requires that home office locations where sales activity regularly takes place must also be registered with the NASD as a branch office. This means that if there are salespeople who work at the same address as the broker-dealer’s corporate, financial or trading activity facilities, that location must still be separately registered as a branch office. Because the Wisconsin definition of branch office is based on the location being required to be registered with the NASD as a branch office, firms must now make initial filings of those locations as branches in Wisconsin. Firms have until May 1, 2006 to complete these filings. While the Division will accept paper filings for branches during this transition period, it encourages all broker-dealers to make their filings electronically through the CRD.

Beginning October 31, 2005, the Division began accepting electronic filing of branch office openings, closings and changes of address via the CRD system utilizing Form BR. The filings must still be made within 14 days of the opening, closing or change of address of a branch office. The notice-filing fee for opening a branch office remains at $30.00 per branch and is collected by the CRD upon filing of Form BR.. (s. DFI-Sec 4.04(7), Wis. Adm. Code & section 551.52(2), Wis. Stats.) There is no filing fee for changes or closings, other than late fees as described below.

If a change to a branch office filing, whether it be an opening, change of address, or closing, is not filed within the time period prescribed, there will be a delinquent filing fee of $100.00. (s. DFI-Sec 7.01(6)(d), Wis. Adm. Code) This is determined by comparing the date of the filing of Form BR with the effective date of the change as noted on the form.

For the renewal year 2006, the renewal of branch offices will be accomplished at the same time as the firm's renewal application via a separate mailing to each firm with branch offices as of October 12, 2005. 2006 renewals will not be accepted via CRD. (See Renewal section) The renewal fee is $30.00 for each branch office. (s. DFI-Sec 4.04(8), Wis. Adm. Code) The Division will notify all firms as to when branch office renewals will be processed through CRD

Branch Offices& Financial Institutions

Broker-dealer branch offices cannot provide services on the premises of financial institutions where retail deposits are taken unless the broker-dealer complies with the following requirements:

• The services of the broker-dealer are conducted in a physical location that is distinct from where retail deposits are taken. In all situations, the broker-dealer services shall be distinguished from those of the financial institutions, and the name of the broker-dealer shall be clearly displayed where the broker-dealer conducts business.
  
  
• Networking and brokerage affiliate arrangements are governed by a written agreement that clarifies the responsibilities of the parties and the compensation arrangements. The agreement must also provide that state securities regulators will be permitted access to the premises where the broker-dealer conducts business to inspect the books and records and sales practices of the broker-dealer.
  
• At or prior to the time a customer's securities brokerage account is opened, the broker-dealer shall disclose to the customer, orally and in writing, that securities products are not insured by the Federal Deposit Insurance Corporation ("FDIC") or by other deposit insurance required of the financial institution, the securities products are not deposits or other obligations of the financial institution, and are not guaranteed by the financial institution, the securities products are subject to investment risks, including the possible loss of the principal invested.
  
• Advertisements and sales literature that announce the location of a financial institution where broker-dealer services are provided must disclose the above information.
  
• All confirmations and account statements must indicate clearly that the broker-dealer provides the brokerage services.
  
• When filing the branch office notice with the Division, indicate that it is located on the premises of a financial institution and include the identity of the institution.