When a registered investment adviser on boards a new registered person, there are a couple of new hire forms the firm needs to collect to be compliant with applicable securities laws and regulations.
To evidence completion of new hire forms by all associated persons, firms should adopt and implement written policies and procedures reasonably designed to prevent violations. Implementation of procedures will often rely on the use of forms and other documents designed to gather or report important data. While the completion of some forms is required by law or regulation, the implementation of other forms reflects principles of good management and controls. Regulators view the adequacy of procedures and the proper completion of forms as indicators of a culture of compliance within the firm. Consequently, firms should periodically verify the adequacy of their policies, procedures, and controls related to new hire forms.
Firms will use a wide range of customized forms and attestations to help them achieve compliance with applicable securities laws and regulations. Firms should periodically assess how it can enhance its compliance program and better supervise employees through the use of new or improved forms, reports, acknowledgments, or attestations.
New Hire Forms Checklist
The compliance forms listed below are commonly used by RIAs. This list is non-exhaustive. You may have other forms required for HR/benefit purposes or other forms that are specific to your firm. All instances of non-compliance should be escalated to your CCO or designated supervisor for resolution.
- Signed U4 – A U4 must be kept in the employee file. The initial U4 must have an original signature of the Registered Representative and hiring Principal. A request for Dual registration should be reviewed and approved before the U4 is processed, as not all states allow dual registration.
- Previous U5 – A copy of the most recent U5 can be printed from CRD.
- Fingerprint Card – A copy or original of fingerprint cards or confirmation of electronic prints, if required by your state
- Communications Agreement
- Social Media Form (if applicable)
- OBA vs. PST Acknowledgment
- Outside Business Activity Form
- RIA Code of Ethics
- Employee agreement Verify identity
If RA registered, have you updated DRP information on Form ADV Part 1, if required.
- Background Check complete – The background check should be reasonably designed to verify the accuracy and completeness of the information contained in an applicant’s initial or transfer Form U4 no later than 30 calendar days after the form is filed with the IARD system. At a minimum, the background check should provide for a search of reasonably available public records to verify the accuracy and completeness of the information contained in the applicant’s initial or transfer Form U4.
- It is recommended to do an internet search to look for websites, or other social media profiles that may be out there.
- Confirm that the advisor’s email as disclosed in the Communication Agreement is being archived through the firm’s approved electronic storage provider? Testing may be done by sending a test email from a non-archived email address; or by reviewing the archive and looking for external emails.
- Advisor has been instructed how to set up voicemail with proper disclosures.
- Advisor’s email has proper disclosures/email archival confirmed.
- The firm should ensure that documents do not contain any non-public customer information that would be in violation of Reg SP. List any documents or client files the RR intends to bring over from the previous firm or any concerns below.
- If Broker Protocol is followed, the RR may only take the following account information: client name, address, phone number, email address, and account title of the clients that they serviced while at the firm.
- Registration approval confirmed (no business conducted until properly approved)
- New hire training assigned/completed. Documentation of assigned training and evidence of completion should be retained in the firm’s Training File.
- Should this person be on Heightened Supervision?
- Confirm Procedures manual has been provided and acknowledged by the advisor?
For more on RIAs, check out some of our other blogs:
- When Do You Have to Register as an Investment Advisor?
- Exclusions from the Definition of Investment Advisor
- Form ADV
MasterCompliance provides expert consulting, outsourcing, and implementation tools in planning and budgeting your firm’s compliance responsibilities. If there are any areas where you would like to explore additional assistance or services, please contact us.