This bulletin is intended to clarify the requirements under section 13.2 of MFDA By-law No.1 respecting information that is required to be provided by a Member wishing to resign from MFDA membership.
Section 13.2 of MFDA By-law No.1 requires Members to provide an audited balance sheet as of such date as the MFDA may require, indicating that the Member has liquid assets sufficient to meet its liabilities other than subordinated loans, if any, or a report from the Member’s auditor without qualification that in the auditor’s opinion the Member has liquid assets sufficient to meet its liabilities other than subordinated loans, if any. Resigning Members (Level 3 or Level 4 dealers) must also provide a report from the Member’s auditor that the Member is in compliance with MFDA By-laws and Rules with respect to the holding of client cash, securities and other property.
The audited balance sheet should be completed as at a date subsequent to the transfer out of client assets and accounts. If an audited balance sheet is submitted, the auditor’s report should be a standard report in accordance with generally accepted accounting principles addressing the reasonability of the balance sheet and should include significant Notes to the audited balance sheet. Generally, the Notes should state that client assets have all been transferred out and no client assets continue to be held by the Member.
For further information regarding the procedure for obtaining MFDA approval of resignations, please refer to MFDA Staff Notice-#0019 (Member Resignations and Reorganizations).