[ by Howard Haykin ] Be Sure Your Firm or Client is not Overcharged By FINRA. Effective 8/13/12 - meaning, it's already in force - FINRA has new procedures for application of the late disclosure fee, as pertaining to the reporting of judgment/lien events on Forms U4.  The procedures are governed by Section 4(h) of Schedule A to the FINRA By-Laws. With the change, FINRA requests member firms, when reporting such events, to provide on Form U4 the date the registered person learned of the judgment/lien.  The late disclosure fee will be based on that date. Basic Requirements. Member firms are required to report when a registered person becomes subject to an unsatisfied judgment or lien - in response to Question 14M on Form U4.  FINRA By-Laws require that firms report such matters within 30 days of having learned of the facts or circumstances giving rise to the event - i.e., the filing of the judgment or lien).  Member firms that fail to do so in a timely manner are subject to a late disclosure fee. Incorrect Late Disclosure Fees. It's come to FINRA's attention that firms have been assessed incorrect late disclosure fees.  The error lies in the fact that the assessment has been computed using the date of filing of the judgment or lien - because, when a firm reports such matters, they firms are required to provide in Section 4 of the Form U4 Judgment/Lien Disclosure Reporting Page (DRP) the date the judgment or lien was filed. Yet, late disclosure fee assessments should be based on the date on which the representative learned of the judgment or lien - not the date such judgment or lien was filed.  Surprisingly, the DRP does not currently elicit in a discrete data field the date the registered person learned of the judgment or lien.  This means FINRA would never obtain the necessary information to compute accurate late disclosure fees.  FINRA notes that many member firms were instructed to contact FINRA staff if they believed the late disclosure fee was assessed in error. New Procedures Implemented to Correct the Errors. As noted above, beginning last week, on 8/13/12, FINRA requests that member firms provide - in addition to the date, the judgment/lien was filed in Section 4 of the DRP - the date the registered person learned of the judgment/lien in Section 8 of the DRP (a free-text section), if it differs from the date provided in Section 4. FINRA assures its member firm that if they provide a date in Section 8 of the DRP, FINRA staff will review the information provided by the member firm to determine whether a filing is late based on the date the registered person learned of the judgment/lien and, if it is late, will assess the late disclosure fee based on that date. Published Guidelines. FINRA has published guidance regarding how firms should report judgment/lien events at Forms U4 and U5 Interpretive Questions & Answers (Question 14M).   Questions regarding this Notice should be directed to the Gateway Call Center at (301) 869-6699. [FINRA INFO NOTE, 8/17/12]