Series 28: Flow-Through Capital Benefits

Flow-Through Capital Benefits

Member firms must receive prior written approval from FINRA in order to guarantee, endorse, or assume the obligations or liabilities of another entity, such as a subsidiary or affiliate. Such relationships usually produce what are called “flow-through capital benefits”—a kind of shared capital between firm and entity. For example, a large financial organization may pose significant risks on its affiliates by its ability to transfer capital from one of its companies to another or to the holding company itself. FINRA wants to know of these affiliated relationships