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Rules & Regulations

FINRA Enhances Its Reviews of Form U4 Disclosures

June 4, 2018

by Howard Haykin


FINRA’s has a relentless history of disciplining brokers who fail – willfully or not – to amend their Forms U4 for assorted disclosable events – e.g., tax liens, personal bankruptcies, and misdemeanor or felony charges. And the sanctions can be harsh. In May, 3 brokers who ‘willfully failed to update their Forms U4’ were, on average, fined $4,000 and suspended 3 months.


Starting July 9th, FINRA will enhance its search of public financial records relating to bankruptcies, judgments and liens. FINRA will conduct these searches within 15 calendar days from the date of an applicant’s Form U4 (Uniform Application for Securities Industry Registration or Transfer). ‘’


Currently, FINRA conducts a search of public financial records for all registered persons on an annual basis to verify the accuracy and completeness of information relating to bankruptcies, judgments and liens reported to the Central Registration Depository (“CRD”) system via the Form U4..


This new verification process will be in addition to FINRA’s monitoring of public financial records for all registered persons.


The enhancements are expected to: (i) reduce the costs to firms associated with conducting these public records checks, which often involve finding and hiring a vendor; (ii) result in more timely reporting of disclosure information to the benefit of regulators, investors and firms; and, (iii) result in a significant reduction of late disclosure fees related to judgments and liens.


Firms and registered persons are required to report unsatisfied liens and judgments within 30 calendar days of learning of the event.


FINANCIALISH TAKE AWAYS.    For further details on FINRA’s new process, as well as the ongoing obligations of firms and their associated persons, consider clicking on the following web pages: