1.1, including by way of example and without limitation, management, accounting, infrastructure, utilities, telephone and computer equipment and systems, furniture and furnishings, and certain personnel (“Refundable Services”). Modern Woodmen will cover costs associated with eligible services, subject to reimbursement by MWAFS. It is common for broker-dealers to enter into cost-sharing arrangements with their parent or affiliates when the parent or affiliate performs administrative functions and provides rooms, facilities, equipment and other services for service charges. If the parent company is an unregistered foreign broker-dealer, the trader may also provide trading and mail-order settlement services in foreign markets. In recent months, NASD and NYSE have been concerned that some broker-dealers may mistakenly omit the expenses and liabilities subject to these agreements from the broker-dealer`s books and records, resulting in inaccurate disclosure of the broker-dealer`s performance and financial condition. SROs are concerned that the omission will artificially inflate the broker-dealer`s profitability and give the impression that it fully meets the capital requirements, if in some cases this is not the case after the actual value of the required expenses has been implemented. Since the party paying a dealer-member`s costs under a cost-sharing agreement is generally not a registered broker-dealer itself, SROs do not have easy access to books and records related to the activities of the dealer-dealer member during an audit. 3.1 As with any business, a broker-dealer incurs costs related to the operation and operation of his business. These costs may include, for example, office space, utilities, human resources and technology.

It is common for a broker-dealer to share these expenses with another party. (e.B a holding company or third party with affiliated owners) In these cases, however, it is crucial that the broker-dealer enters into a so-called cost-sharing agreement. The cost-sharing agreement clearly defines the proportion of each issue that is allocated to the broker-dealer. One. No. Existing agreements or arrangements must be amended or codified and notified to the company`s DEA. NASD district offices have now taken the lead in reviewing existing cost-sharing arrangements as part of routine reviews and ongoing membership applications. One.

On July 11, 2003, the SEC issued a letter containing nine requirements for accounting for broker-dealer fees and liabilities. These requirements came into effect on the date of the SEC`s letter; However, the NASD extended the compliance deadline for its members to December 1, 2003. If the broker-dealer does not grant access to these books and records, the SRO may assume that the broker-dealer was not in compliance with the capital during the term covered by the cost-sharing agreement. A. Yes. Interpretation also applies in this case, even if the perceived problem on which the interpretation is based does not exist. Companies which have thus generated revenue on the ground that the parent company bears the major part of the costs must consider whether those costs continue to be justified on tax and other grounds, or whether the subsidiary should instead pay dividends to its parent company in amounts exceeding the justified value of the services provided. Such payments would, of course, be subject to the SEC`s capital withdrawal rules.

3.7 Obligation, agreement or condition. 2.3 Â Â Â Â.

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