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Rules & Regulations

FINRA Enhances CRD Reviews: Firms Save on Compliance Risks and Costs

July 6, 2018

by Howard Haykin


For the past several years, FINRA has been checking public financial records on an annual basis to ensure that financial disclosures in individual brokers’ CRD files are accurate. Beginning Monday, July 9, FINRA will conduct such reviews of public records when a Form U4 is submitted – and contact the applicant’s firm within 15 calendar days of the application if information may be missing or contains discrepancies.


What this means is that firms will no longer have to validate answers to financial disclosure questions on Form U4 when it hires a new registered rep – an obligation that firms have typically fulfilled by hiring vendors to perform public record checks in search of undisclosed personal bankruptcies, judgments and liens.


FINRA estimates that firms will save a combined $1.5 million to $3 million per year by avoiding search fees charged by vendors and fees assessed by FINRA for late filings. And, besides enabling firms to more readily accomplish their reporting obligations, FINRA expects that data collected in CRD – and made available through BrokerCheck – will be more current and reliable.


WORD OF CAUTION.    While firms can rely on the financial public record reviews performed by FINRA to satisfy the applicable part of FINRA Rule 3110(e) (Responsibility of Member to Investigate Applicants for Registration), FINRA’s review does not relieve firms or registered reps of their duty to keep their records up to date. Firms should review FINRA InfoNote - 5/18/18 (Enhancements to FINRA’s Disclosure Review Process Relating to Public Financial Records), for additional information.