The U4, also known as the Uniform Application for Securities Industry Registration or Transfer, is the primary source of information for a registered representativeās (also known as ābrokerā, āfinancial professionalā, āfinancial advisorsā) Central Registration Depository (CRD) or Investment Adviser Registration Depository (IARD) record. Both the firm and the registered representative can update Form U4, but it is ultimately the registered representativeās responsibility to make sure Form U4 is accurate and current.
The U4 record, contains personally identifiable information about each applicant such as name, SSN, physical characteristics, address history, work experience, and education. In addition, the U4 also requires disclosure of other less obvious areas of your background. These areas are often the cause of reporting disclosure failures.
Why is it important to keep your U4 current?
The U4 should be seen as a living document that evolves as you do. Therefore, certain updates and changes during your life require an update to your U4 record.
Article 5, Section 2 of the FINRA Bylaws require that any person applying for registration with FINRA submit an application (the Form U-4) and that the application be kept current, by amendment, at all times.
This section of the rule requires certain disclosable events to be amended on the U4 within 30 days of after learning of the facts giving cause to make an amendment, but if the amendment involves a statutory disqualification, then it must be filed within 10 days, as opposed to 30 days.
Disclosure Best Practices
The following are key sections that require disclosure updates. Timelines may vary from 10 days to 30 days so make sure you understand your reporting timeline obligations.
- Outside Business Activities (FINRA Rule 3270)
- Personal Information (Name change, address, employment history)
- Customer Complaints
- Liens/Judgements/Bankruptcies
- Criminal/Civil Disclosures
- Arbitrations
- Regulatory Actions
- Compromise with Creditors
Our blog on Form U4 Disclosure Obligations provides more information on the areas mentioned above
Ā What are the consequences of failure to disclose or late disclosure?
The consequences for filing a disclosure late, include fines and suspension from FINRA under FINRA Rule 1122 and FINRA Rule 2010. The consequences can be more severe if FINRA finds that the representatives’ failure to update Form U4 was āwillfulā (meaning that the financial representative/broker of his own volition provided false answers on his Form U4). This includes statutory disqualification which means the representative cannot become or remain associated with a FINRA-member firm.
Under Section 3(a)(39)(F) of the Securities Exchange Act of 1934, a person is subject to statutory disqualification if he or she āwillfullyā made any āfalse or misleadingā statement in any application to become associated with a member of a self-regulatory organization (such as FINRA).
Whether you are too embarrassed or think itās not important to disclosure, your decision could end up causing you to pay fines or worse, can have the effect of permanently ending your career. So make the right one, and when in doubt. Disclose.