FINRA Enhances Disclosure Review Process

As I’m sure you already know from reading our previous blogs on the subject, FINRA Rule 3110(e) (Responsibility of Member to Investigate Applicants for Registration) requires that member firms must “ascertain by investigation the good character, business reputation, qualifications, and experience of an applicant” prior to submitting a Form U4 and requesting to associate and register such an applicant with the firm. However, as recently announced, FINRA has made enhancements to its disclosure review process that will make this verification easier than ever.  Such enhancements will allow member firms to rely upon FINRA’s verification process for purposes of compliance with the requirement to conduct a search of public records relating to bankruptcies, judgments and liens.

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FINRA Rule 3110(e): Form U4 Verification Process

In our August 31 post about FINRA Rule 3110(e) (Supervision: Responsibility of Member to Investigate Applicants for Registration), we discussed the necessity of background checks and the expected depth and breadth of the investigation process. Rule 3110(e) also requires that FINRA member firms adopt written procedures to verify the accuracy and completeness of the information in an applicant’s Form U4. Read More…

FINRA Rule 3110: Background Checks

FINRA Rule 3110(e) (Supervision: Responsibility of Member Firms to Investigate Applicants for Registration) dictates that member firms must “ascertain by investigation the good character, business reputation, qualifications, and experience of an applicant”. In other words, member firms are required to run thorough background checks on all sponsored applicants for registration.

Among other things, the information gained from a thorough investigation is used to update the applicant’s Form U4, Read More…