Under SEC Rule 17F-2, every member of a national securities exchange, broker, dealer, registered transfer agent and registered clearing agency, and national securities association (as well as others), shall require that each of its partners, directors, officers, and employees be fingerprinted and submit appropriate and complete fingerprint cards to FINRA. FINRA then transmits these fingerprints and identifying information to the FBI to identify and process, consistent with protocols and requirements established by the Attorney General.
Who is Required to be Fingerprinted?
SEC Rule 17f-2 requires that the following associated persons be fingerprinted:
- Persons applying for registration. A fingerprint card must be promptly submitted. FINRA may make a registration effective pending receipt of the fingerprint information. If fingerprint information is not received within 30 days following FINRA’s receipt of Form U4, the registration will be changed to “inactive-prints.” The individual must then cease doing business until such time as the fingerprint card is received and entered into the Web CRD;
- Persons involved in handling customer funds or securities (this also applies to employees of transfer agents);
- Persons involved in the preparation of the firm’s original books and records (blotters); and
- Persons who supervise any of these
Access to Books and Records
Occasionally, a firm may submit fingerprint information for a non-registered person. For example, those people who are granted access to the books and records of the firm, such as an outside bookkeeper. Making certain that those who work on the firm’s books and records carry no history of violating laws that would call into question their ability to provide faithful and truthful service is part of a robust supervisory effort. Web CRD maintains fingerprint cards for non-registered individuals through non-registered fingerprint (NRF) filings. There is no departure filing for a NRF person unless there was statutory disqualification event. Summer interns need not be fingerprinted unless they sell securities or have access to handling or processing securities, money, or original books and records or access to those who supervise that activity.
Illegible Fingerprints
If fingerprints are illegible to the FBI scanners and it rejects the fingerprint card, the member firm is obligated to submit again, up to three sets. The firm may not submit all three sets at once. If a fingerprint card is submitted for an associated person on at least three occasions and it is returned each time due to illegibility, FINRA may request that the FBI search its database using the associated person’s full name. Fingerprints must be rolled in black ink. The card must be signed by the person being fingerprinted and by the official taking the prints.
Record Keeping Requirements
All fingerprint cards, records, and information required is to be maintained and retained for at least three years after termination of that person’s employment or relationship with the organization at the firm’s principle office. The SRO acting as the firm’s DEA may also maintain the fingerprint cards. This is the same retention requirement period as for Forms U4 and U5.
For more information, check out FINRA’s FAQ about Fingerprint Processing.
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