CAB broker Accounts

Capital Acquisition Broker (CAB) Account Types

Capital Acquisition Brokers (CABs) offer a specialized account type designed for firms that exclusively engage in corporate financing activities. These activities typically include advising issuers on securities offerings, assisting with mergers and acquisitions, and acting as placement agents for unregistered securities sold to institutional investors. CAB accounts are tailored to streamline compliance and regulatory obligations, allowing firms to focus on their limited scope of activities without the extensive requirements associated with traditional broker-dealer accounts.

CAB Broker Account Opening Process

To open a CAB account, firms must follow a specific process:

• Eligibility Assessment: Ensure that your firm qualifies as a CAB by engaging exclusively in permitted activities such as advising on capital raising or corporate restructuring.

• New Membership Application (NMA): Submit a New Membership Application to FINRA, attesting that your activities will be limited to those allowed for CABs. This application must demonstrate compliance with CAB rules and regulations.

• Documentation Preparation: Prepare necessary documentation, including detailed business plans, financial statements, and compliance procedures that align with the CAB framework.

• Regulatory Review: After submission, FINRA will review the application to ensure it meets the standards for CAB membership. The review process typically takes between six to nine months.

• Membership Interview: Participate in a membership interview with FINRA staff, where you'll discuss your firm's operations and compliance structure.

• Approval and Agreement: Upon approval, you will receive a decision letter from FINRA outlining the terms of your CAB membership. You must execute a membership agreement acknowledging compliance with the CAB rules.

• Compliance Implementation: Implement an Anti-Money Laundering (AML) compliance program and ensure ongoing adherence to FINRA's simplified regulatory requirements for CABs.

By following these steps, firms can successfully establish a CAB account and benefit from a regulatory structure tailored to their specific business activities.