Table of Contents
SERIES 7 | SERIES 24 | FINANCIAL REGULATION COURSES
FINRA Rule 11573 addresses the temporal-succession scenario this dictionary's FINRA Rule 11570 entry anticipated — a certificate registered in the name of a firm that has since dissolved, with one or more successor firms now in existence, where the question is how the successor firm establishes its right to deal with a certificate registered in the dissolved predecessor's name.
The rule consists of one sentence: a certificate with an assignment or a power of substitution executed in the name of a firm that has since dissolved and is succeeded by a firm or firms having as general partners one or more of the general partners of the dissolved firm shall be a good delivery only if the new firm or one of the new firms shall have signed the statement "Execution Guaranteed" under a date subsequent to the formation of the new firm so signing. FINRA Rule 11573 was amended by SR-FINRA-2010-030 effective December 15, 2010 — no prior amendment date is listed. One selected notice is associated — Regulatory Notice 10-49.
FINRA Rule 11573 sits within the 11500 Delivery of Securities with Restrictions subsection of the 11000 Uniform Practice Code, as the third rule of the FINRA Rule 11570 Certificates in Various Names cluster, immediately following FINRA Rule 11572's certificate in name of firm presumption and immediately preceding FINRA Rule 11574's certificate in name of deceased person, trustee, etc. framework.
FINRA Rule 11573's predicate condition is carefully circumscribed — it does not apply to every situation where a firm has dissolved and some successor entity now exists. The rule applies specifically where the dissolved firm is succeeded by a firm or firms having as general partners one or more of the general partners of the dissolved firm.
This formulation describes a specific kind of continuity — not necessarily complete continuity (the successor firm need not have all of the dissolved firm's general partners, and the dissolved firm could even be succeeded by multiple successor firms, with different former general partners distributed among them), but partial continuity through shared personnel at the general partner level.
The successor firm or firms share one or more general partners in common with the dissolved predecessor firm — a continuity of governing personnel, even where the firm itself, as a legal entity, has dissolved and a new entity has taken its place.
This predicate connects directly to FINRA Rule 11572's partnership presumption examined in this dictionary's immediately preceding entry — FINRA Rule 11573 presupposes that the dissolved firm was a partnership (or similar entity with general partners), consistent with FINRA Rule 11572's default presumption that firm or business name registrations represent partnerships rather than corporations.
The general partners concept that FINRA Rule 11573's predicate turns upon is itself a partnership-specific concept, reinforcing the structural relationship between these two rules within the FINRA Rule 11570 cluster — FINRA Rule 11572 establishes the partnership presumption for firm-name registrations generally, and FINRA Rule 11573 then addresses what happens when such a partnership (the dissolved firm) ceases to exist but is succeeded by an entity sharing one or more of its general partners.
FINRA Rule 11573's operative requirement is that the new firm or one of the new firms shall have signed the statement "Execution Guaranteed" under a date subsequent to the formation of the new firm so signing.
This requirement has two components working together. First, the statement itself — "Execution Guaranteed" — must be signed by the new firm (or, where there are multiple successor firms, by one of them). This statement functions as the successor firm's affirmation that the execution — the assignment or power of substitution executed in the dissolved firm's name — is guaranteed, presumably meaning the successor firm is vouching for the validity and continuing effect of that execution notwithstanding the named firm's dissolution.
Second, and critically, this "Execution Guaranteed" statement must be signed under a date subsequent to the formation of the new firm so signing. This dating requirement ensures that the guarantee is not merely a formality executed at some arbitrary point, but specifically post-dates the successor firm's own formation — the successor firm, having itself come into existence, then provides this guarantee, with the date establishing that the guaranteeing entity actually existed (as the new firm) at the time it provided the guarantee.
The subsequent to the formation of the new firm dating requirement serves a verification function analogous in character to several of the documentation requirements this dictionary has examined in connection with FINRA Rule 11550 and FINRA Rule 11571. Just as FINRA Rule 11571(b)(2)'s certificate of incumbency establishes that a specific individual currently holds the corporate office a resolution authorizes, FINRA Rule 11573's dating requirement establishes that the entity providing the "Execution Guaranteed" statement — the new firm — actually existed as such at the time it provided that guarantee.
Without this dating requirement, a guarantee signed in the new firm's name could theoretically have been signed at any time — including, hypothetically, before the new firm's formation, which would raise the question of how an entity not yet in existence could meaningfully guarantee anything. By requiring that the date of the "Execution Guaranteed" statement be subsequent to the new firm's formation, FINRA Rule 11573 ensures a coherent temporal sequence: the original firm dissolved; the new firm (sharing one or more general partners with the dissolved firm) was formed; and only after that formation did the new firm provide its guarantee regarding the execution in the dissolved firm's name. This sequence establishes that the guaranteeing entity had actually come into existence — with whatever legal capacity and authority a duly formed firm possesses — before undertaking to guarantee the execution.
FINRA Rule 11573 addresses a gap that arises specifically because the entity in whose name the assignment or power of substitution was executed — the dissolved firm — no longer exists. A receiving party presented with such a certificate faces an obvious question: the assignment bears the name of a firm that has dissolved — who, if anyone, stands behind that execution now?
FINRA Rule 11573's answer is that the successor firm (or one of the successor firms, where there are multiple) — specifically, a successor sharing one or more general partners with the dissolved firm — can stand behind the execution, by providing the "Execution Guaranteed" statement. The shared-general-partners predicate ensures that this guaranteeing successor is not simply any entity that happens to have adopted a similar name or claims some informal connection to the dissolved firm, but specifically an entity whose own governing personnel include individuals who were themselves general partners of the dissolved firm — individuals who, by virtue of having been general partners of the dissolved firm, would themselves have direct knowledge of and authority regarding the dissolved firm's affairs, including the execution in question.
In this sense, FINRA Rule 11573 functions as a bridge mechanism — bridging the gap between an execution made in the name of an entity that no longer exists, and a receiving party's need for some currently-existing entity to stand behind that execution, with the bridge specifically constructed through the continuity of general partners between the dissolved firm and its successor.
This dictionary's earlier entry on FINRA Rule 11570 anticipated that the four rules within the Certificates in Various Names cluster present a progression from relatively institutionally straightforward categories toward increasingly specialized and fact-dependent categories — corporations (FINRA Rule 11571), firms generally (FINRA Rule 11572), dissolved firms succeeded by new firms (FINRA Rule 11573), and deceased persons, trustees, and similar categories (FINRA Rule 11574).
FINRA Rule 11573's position in this progression — third of four, addressing a temporal-succession scenario that builds directly on FINRA Rule 11572's partnership-presumption framework — confirms the anticipated progression. FINRA Rule 11571 addressed the relatively institutionally well-defined category of corporations, with their formal governance documentation (resolutions, certificates of incumbency). FINRA Rule 11572 addressed the classification question for firm or business names generally, establishing the partnership presumption. FINRA Rule 11573 now addresses a specific complication that can arise for partnerships specifically — what happens when the partnership itself, as an entity, ceases to exist (dissolves), with a successor entity (sharing general partners) taking its place. This complication has no direct analog in FINRA Rule 11571's corporate framework — a corporation's dissolution would present its own distinct questions, not addressed by FINRA Rule 11573's general-partners-continuity framework, which is specifically calibrated to the partnership context FINRA Rule 11572's presumption establishes as the default for firm-name registrations.
FINRA Rule 11573 connects to FINRA Rule 11550 — whose general assignment and power of substitution framework FINRA Rule 11573's predicate (a certificate with an assignment or a power of substitution executed in the name of a firm that has since dissolved) presupposes, with FINRA Rule 11573 addressing the specific complication that arises when the entity named in that assignment or power of substitution has itself ceased to exist. It connects to FINRA Rule 11570 as its parent series marker, the third of the four rules that cluster organizes. It connects directly and substantively to FINRA Rule 11572 — whose partnership presumption for firm-name registrations establishes the conceptual predicate (a partnership with general partners) that FINRA Rule 11573's dissolved-firm-succeeded-by-new-firm scenario builds upon, with the general partners concept being itself a partnership-specific concept FINRA Rule 11572's presumption brings into play. It connects to FINRA Rule 11571 as a structural point of contrast — FINRA Rule 11571's corporate framework addresses corporate-specific documentation (resolutions, certificates of incumbency) for an ongoing corporate entity, while FINRA Rule 11573 addresses a partnership-specific succession scenario (dissolution with shared-general-partner continuity) that has no direct corporate analog within the FINRA Rule 11570 cluster. And it connects to FINRA Rule 11574 — the final rule in the cluster, addressing certificates in the name of deceased persons, trustees, and similar categories, which this dictionary anticipates may present its own distinct succession-and-continuity questions, potentially with structural parallels to FINRA Rule 11573's approach of identifying a currently-existing party with an appropriate connection to the originally-named party who can provide the necessary assurance for good delivery purposes.
FINRA Rule 11573 is tested on the Series 7 and Series 24 examinations as the framework for certificates with assignments or powers of substitution executed in the name of a dissolved firm succeeded by a new firm sharing general partners with the dissolved firm.
The key points to retain are these: FINRA Rule 11573 applies where a certificate's assignment or power of substitution was executed in the name of a firm that has since dissolved, and that dissolved firm is succeeded by a firm or firms having as general partners one or more of the general partners of the dissolved firm — a partial-continuity predicate building on FINRA Rule 11572's partnership presumption for firm-name registrations; for such a certificate to be good delivery, the new firm (or one of the new firms, where multiple successors exist) must have signed the statement "Execution Guaranteed" under a date subsequent to the formation of the new firm so signing; this dating requirement establishes that the guaranteeing successor firm actually existed as such at the time it provided the guarantee, paralleling the verification function FINRA Rule 11571(b)(2)'s certificate of incumbency serves for corporate officers; FINRA Rule 11573 functions as a bridge mechanism, allowing a currently-existing successor entity — specifically one sharing general partners with, and therefore having direct knowledge of and authority regarding, the dissolved firm's affairs — to stand behind an execution made in the name of an entity that no longer exists; and the rule was amended December 15, 2010 through SR-FINRA-2010-030 — no prior amendment date listed — with one selected notice, 10-49.
