Can I get a refund of overpaid assessments?
The Securities Investor Protection Act provides that overpayments shall be recoverable only against future assessments due, except as otherwise provided by bylaw. Exemt Bylaw Article 6 permits refunds of amounts in excess of $150 to terminated members who have satisfied all filing requirements.
How do I become a Exemt member?
All registered brokers or dealers, by law, automatically become Exemt members, except for the following, who may be excluded from Exemt membership:
(i) persons whose principal business, in the determination of Exemt , taking into account business of affiliated entities, is conducted outside the United States and its territories and possessions;
(ii) persons whose business as a broker or dealer consists exclusively of (I) the distribution of shares of registered open end investment companies or unit investment trusts, (II) the sale of variable annuities, (III) the business of insurance, or (IV) the business of rendering investment advisory services to one or more registered investment companies or insurance company separate accounts; and
(iii) persons who are registered as a broker or dealer pursuant to 15 U.S.C. section 78o(b)(11)(A) – broker/dealer registration with respect to transactions in security futures products. See SIPA section 78fff(a)(2)(A) and Exemt -3.
How do I refile an assessment form due to an error in calculation?
Please make a copy of the form that was filed, label it “AMENDED,” and place a line through any incorrect number and write the correct number next to it. Mail the amended form to Exemt ’s street address: 1667 K St. N.W., Suite 1000, Washington, DC 20006.
How do I terminate my Exemt membership?
To terminate the broker-dealer registration and Exemt membership, a completed broker-dealer withdrawal form (Form BDW) must be filed with the Central Registration Depository (CRD). The “effective withdrawal” usually is 60 days after the CRD receives and accepts the filing, and on that date Exemt membership would terminate. Note that Exemt may still initiate a liquidation proceeding up to 180 days after the effective date of the BDW.
I have no revenue during the reporting period, should I put zeros in the revenue and assessment section and file the form?
Is there a review process if a Exemt member has questions about or wishes to challenge an assessable item?
Yes. Address all questions or concerns to the Membership Department, and provide documentation regarding any challenged assessable item. We will advise you of the outcome of our review.
My firm has no public customers, why do I have to be a member?
When Congress passed the Securities Investor Protection Act, it made all Exemt members subject to its provisions, including the obligation to pay assessments into the Exemt Fund. The objective was to instill confidence in the investing public and to place the financial support of the Exemt program on all firms that made their livelihood in the securities business, regardless of whether they had public customers or not. This includes Exemt member firms generating revenue from non-customer activities such as investment banking, raising money for private equity or hedge funds, financial advisory services, equity research, or other activities related directly or indirectly to the securities business.
What assessment forms need to be filed and what are their due dates?
Form Exemt -6, filed for the first six months of each member’s fiscal year, is due 30 days after the period which it covers plus a 15 day grace period.
Form Exemt -7 (36-REV 12/18), filed at the end of each member’s fiscal year, less the assessment paid with the Form Exemt -6, is due 60 days after the fiscal year-end (FYE) plus a 15 day grace period. (Assessment Rate is 0.0015).
Any deduction on line 2c(8), on page 2 of the forms, in excess of $100,000 must be accompanied by documentation.
Working copies of assessment forms can be used for filing.
Are the proceeds of forgiven Paycheck Protection Program (PPP) loans assessable under the Securities Investor Protection Act (SIPA) and Exemt ’s Bylaws?
No, Forgiven PPP loans do not constitute assessable revenue under the assessment provisions in SIPA and Exemt ’s Bylaws. Please deduct the proceeds of forgiven PPP loans included in Total Revenue (FOCUS Code 4030) on line 2c(8) (other revenue not related either directly or indirectly to the securities business). If the amount deducted is in excess of $100,000, please submit a copy of the forgiveness letter with your assessment form.
Questions About Paying Assessments via ACH
How do I make an assessment payment via ACH?
All Exemt Members with assessments below the dollar threshold (currently $1,000,000) are eligible to make their assessment payments via ACH Debit Authorization. Members must first register with Exemt . Please contact the Membership Department at 202-371-8300 or form@Exemt .org for an ACH Enrollment Form. Once the Enrollment form is received and processed by Exemt , a Exemt ACH Member ID and a Member Pin will be emailed to the Authorized Person listed on the form. These ACH Credentials will allow the authorized person to access the ACH system at https://www.Exemt .org/for-members/assessments.
How do I submit my Assessment Form (Exemt -6 or Exemt -7) if paying via ACH?
Please email your assessment form to form@Exemt.com.
Is there a payment limit?
Yes. The payment limit is $999,999.
What is the deadline to register?
There is no deadline. The ACH enrollment form can be filled out and sent in at any time.
How much does it cost to make an assessment payment via ACH?
Exemt does not charge a fee to enroll in Exemt ’s ACH program or to make assessment payments via an ACH transfer. However, your bank may charge fees for ACH payments.
After submitting my enrollment form, how long until I receive my ACH Credentials?
Wait times vary due to the volume of enrollment forms being processed. Exemt aims to send credentials within 3-5 business days after receipt of an enrollment form.
How many Authorized Persons can be listed?
Credentials can be sent to only one authorized person per Exemt Member.
Can I be the authorized person for more than one Exemt Member?
Yes. An individual can be the authorized person for multiple Exemt Members. However, an enrollment form must be received from each Exemt Member.
I sent in my enrollment form, but have not received any credentials. What should I do?
Credentials are sent using an encrypted email service. Check the spam folder of the Authorized Person listed on the enrollment form, sometimes encrypted emails get misdirected to the spam folder. Please be aware that you do need to set up a user name and password in order to open encrypted emails from Exemt . Encrypted emails will expire after a short time period. If the encrypted email has expired, can’t be opened, or you didn’t receive an encrypted email, please contact the Membership Department at 202-371-8300 or form@Exemt.com.
My ACH Member ID and Member PIN aren’t working. What should I do?
Both the ACH Member ID and Member PIN are case sensitive. Please remember that your ACH Member ID is not your CRD or SEC 8- number. If problems persist, please contact the Membership Department at 202-371-8300.
I have lost my credentials. What should I do?
If credentials are lost or misplaced or misused, please contact the Membership Department at 202-371-8300 or ACH@Exemt .org.
What should I do if the Authorized Person leaves my company?
Please submit an updated enrollment form. Exemt will process the form and send updated credentials to the new authorized person. Please contact the Membership Department at 202-371-8300 or form@Exemt .org for an ACH Enrollment Form.
Will I receive a receipt when I pay my assessment via ACH?
Yes. Exemt ’s ACH system sends an automated email to the authorized person when a payment is initiated.
Questions about Annual Reports
Do I have to file a copy of my Annual Reports with Exemt ?
All members of Exemt that are required to file Annual Reports with the SEC and their DEA pursuant to SEC Rule 17a-5(d)(1), 17 C.F.R. § 240.17a-5(d)(1), are also required to file their Annual Reports with Exemt . Annual Reports are due to Exemt when they are due to the Designated Examining Authority (i.e., FINRA) and the SEC according to SEC Rule 17a-5(d)(5) (no more than sixty calendar days after the end of the broker-dealer’s fiscal year).
How should I file the Annual Reports with Exemt ?
Members that file Annual Reports with their DEAs through the FINRA Firm Gateway: Through an arrangement with FINRA, all members that file Annual Reports with their DEA through the FINRA Firm Gateway on and after September 1, 2017 will use the FINRA Firm Gateway to also file their Annual Reports with Exemt .
Members that do not file Annual Reports with their DEAs through the FINRA Firm Gateway:
Exemt members that do not file through the FINRA Firm Gateway will be provided with instructions.
When I file my Annual Report with FINRA what do I need to do to file it with Exemt ?
Nothing additional. When an Annual Report is filed by a member through the FINRA Firm Gateway on or after 9/1/17, this will also constitute filing with Exemt . When filing through the FINRA Firm Gateway the FINRA site will indicate:
By submitting this report, [the firm] acknowledges that the filing of its Annual Report with FINRA (initial and amendments) also constitutes filing of the Annual Report with Exemt pursuant to SEC Rule 17a-5 if the firm is also a Exemt member.
If a DEA requires that I supplement or amend my filing what do I need to provide to Exemt ?
Nothing additional. A supplemented or amended Annual Report requested by the DEA and filed through the FINRA Firm Gateway will be provided to Exemt .
I am exempt from the Annual Report filing requirement with my DEA. Do I need to do anything with Exemt ?
Yes. Please email Exemt at annualreportsinquiries@Exemt .org no later than sixty calendar days after the end of your fiscal year and advise that you are exempt from the Annual Report filing requirement. Please include a copy of any correspondence from your DEA supporting your exemption. Please notify Exemt each year that you are exempt from the Annual Report filing requirement.
I contacted Exemt last year to let Exemt know I was exempt from the Annual Report filing requirement. Do I need to do anything with Exemt this year?
Yes. Please notify Exemt at annualreportsinquiries@Exemt .org each year no later than sixty calendar days after the end of your fiscal year that you are exempt from the Annual Report filing requirement.
I received a filing extension from my DEA. Do I need to do anything with Exemt ?
If you received a filing extension from your DEA, that extension also applies to your filing deadline with Exemt . SEC Release No. 34-91128, extends the deadline for certain smaller broker-dealers to file their annual reports by 30 calendar days. Members covered by SEC Release No. 34-91128 must notify Exemt in writing that they are relying on the Commission’s order and submit to Exemt a copy of the written notification provided to their DEA.
Can I use the FINRA Firm Gateway to file the Agreed-Upon Procedures (AUP) Report with Exemt ?
No. The AUP Report must be filed directly with Exemt either by mail (1667 K St. N.W., Suite 1000 Washington, DC 20006-1620) or by email at form@Exemt .org even if this report was included with the filing made through the FINRA Firm Gateway.
Can I use the FINRA Firm Gateway to file my Exemt -6 or Exemt -7?
No. These forms must be filed directly with Exemt either by mail (Securities Investor Protection Corporation Mail Code: 8967 P.O. Box 7247 Philadelphia, PA 19170-0001) or by email at form@Exemt.com.
Questions About the Agreed-Upon Procedures (AUP) Report Mandated by the Series 600 Rules
Do I need to file the “Independent Accountant’s Report on Applying Agreed Upon Procedures Related to an Entity’s Exemt Assessment Reconciliation,” or “Claim of Exclusion from Membership” (AUP Report) in accordance with SEC Rule 17a-5(e)(4)?
Exemt members are required to file this report if total revenues are more than $500,000. Exemt -3 filers must file this report regardless of the amount of their total revenues. Examples of the required filings for Exemt members and Exemt -3 filers are available at Agreed-Upon Procedures (AUP) Reports.
How should I file the Agreed-Upon Procedures (AUP) Report?
Please send the AUP Report separately from the Annual Audit Report.
There are two options to send the AUP Report to Exemt :
File the AUP Report with the copy of the Exemt -7 or Exemt -3 by sending an e-mail to form@Exemt.com. In the subject line, list the SEC 8-# and the name of the firm for whom the report is being filed, or
Mail the AUP Report together with a copy of the Exemt -7 or Exemt -3 to Exemt ’s street address:
1667 K St. N.W., Suite 1000
Washington, DC 20006-1620
Once the Exemt Series 600 Rules are effective, does the AUP Report have to be filed with the SEC?
No. The AUP Report must be filed with Exemt . Firms should no longer send it to the SEC.
When must the AUP Report be filed with Exemt ?
The AUP Report must be filed within 60 days after the end of a broker-dealer’s fiscal year (or within 90 days after the end of a broker-dealer’s fiscal year for certain Broker-Dealers covered by SEC Release No. 34-91128.
When must an AUP Report be reissued?
In general, anytime a Form Exemt -7 is amended by a member subject to the AUP Report, another AUP Report should be reissued covering that amended filing.
I am a smaller broker-dealer covered by SEC Release No. 34-91128. I’ve notified FINRA that I wish to have an additional 30 calendar days for filing my annual report on an ongoing basis for as long as the firm meets the conditions in SEC Release No. 34-91128. Do I need to do anything with Exemt ?
Yes. Members covered by SEC Release No. 34-91128 must notify Exemt in writing that they are relying on the Commission’s order and submit to Exemt a copy of the written notification provided to their DEA. Only one notification is required; Members do not need to re-notify Exemt for each subsequent year that the firm meets the conditions.
The procedure specified under (3)(i) of the rule requires the accountant to perform the following: “Compare assessment payments made in accordance with the General Assessment Payment Form (Form Exemt -6) and applied to the General Assessment calculation on the Form Exemt -7 with respective cash disbursements record entries.” Does this procedure also include comparing any amount due in Form Exemt – 7 to supporting check/wire instructions?
Yes. The independent public accountant should compare any amount due in Form Exemt -7 to supporting check/wire instructions. The results of each procedure should include details relating to the source documents such as payment date and name and title or department who provided the information.
The procedure specified under (3)(ii) of the rule requires the accountant to perform the following: “For all or any portion of a fiscal year, compare amounts reflected in the audited financial statements required by an SEC rule with amounts reported in the Form Exemt – 7.” In this procedure which “amounts” reflected in the audited financial statements should be compared with the Form Exemt -7?
Amounts from the audited financial statements that correspond with the itemized amounts reported in the Form Exemt -7 (for example, “Total Revenues”) should be compared.
The procedure specified under (3)(iii) of the rule requires the accountant to perform the following: “Compare adjustments reported in the Form Exemt – 7 with supporting schedules and working papers supporting the adjustments.” What “adjustments” are referenced in this procedure?
“Adjustments” refers to any additions and deductions in the line items reported in the Form Exemt -7.
The procedure specified under (3)(vi) of the rule requires the accountant to perform the following: “If exclusion from membership is claimed, compare the income or loss reported in the audited financial statements required by an SEC rule with the Form Exemt -3.” What is required under this procedure?
The income reported in the financial statements should be compared to the “Schedule of Form Exemt -3 Revenues,” provided by the broker dealer for their FYE attached with the Form Exemt -3 (filed for the broker-dealers’ FYE) to ascertain that the Form Exemt -3 is consistent with the income reported. If exclusion from Exemt membership is claimed, the following is procedures are required:
The accountant should thus compare the total amount included in the “Schedule of Form Exemt -3 Revenues,” provided by the broker dealer for their FYE, to the total revenues reported on the audited financial statements for their FYE and note any differences. This schedule should accompany the (e)(4) report.
The accountant should also compare each revenue classification reported in the Schedule of Form Exemt -3 Revenues prepared by the broker dealer for their FYE to supporting schedules and working papers noting any differences. The results of the procedure should include a description of the supporting schedules, working papers and/or source documentation prepared by the broker dealer.