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Regulatory Sanctions

Willful Failure to Amend Form U4 - FINRA's Latest Case

July 17, 2018

by Howard Haykin


In this case, between July 2010 and April 2016, a broker willfully failed to amend or timely amend his Form U4 to report a Chapter 7 bankruptcy petition, a federal tax lien and a civil judgment, each of which occurred during 2010. 


To settle these FINRA charges, this broker - with 31 years’ experience with 14 firms - agreed to a $7.5K fine and a 9-month suspension.


1.  Civil Judgment.   In February 2010, a bank obtained a civil judgment against the broker for $93,651 on a past due home equity line of credit. He became aware of the civil judgment no later than June 2010 in connection with a voluntary bankruptcy petition – see below. [In June 2015, almost 5 years after broker was first obligated to file a Form U4 amendment, JPMorgan filed an amendment disclosing that event.]


2. Bankruptcy Petition.   In June 2010, the broker filed through counsel a Bankruptcy Petition under Chapter 7 of the U.S. Bankruptcy Code. Respondent had knowledge of the petition's filing at the time. [In February 2014, nearly 4 years after broker was first obligated to amend his Form U4, JPMorgan filed an amendment to the form disclosing that event.]


3. Federal Tax Lien.   In November 2010, the IRS filed a tax lien against broker for $15,983; and broker received notice of that lien one day later, on November 5, 2010. One year later, in December 2011, the IRS tax lien was released. [In April 2016, almost 5-1/2 years after broker was placed on notice of the filing of the IRS Tax Lien, his then-employer, Ameriprise, filed an amendment to his Form U4 disclosing the lien.]


During the 6-year period, the broker also:


  • filed a number of U4 amendments that were false in that they misrepresented that he had no reportable bankruptcies, liens, and/or civil judgments.
  • submitted a compliance certification to his employer, Chase Investment Services, which falsely stated that he had not been the subject of any judgments during the prior year.




Article V, Section 2(c) of FINRA's By-Laws … requires that registered representatives keep their Form U4 "current at all times," and with certain exceptions, file any amendments to the form "not later than 30 days after learning of the facts or circumstances giving rise to the amendment."
FINRA Rule 1122 … states that "[n]o . . . person associated with a member shall file with FINRA information with respect to . . . registration which is incomplete or inaccurate so as to be misleading, or which could in any way tend to mislead, or fail to correct such filing after notice thereof."
FINRA Rule 2010 …  states that a member, in the conduct of its business, shall observe high standards of commercial honor and just and equitable principles of trade. A violation of Article V, Section 2(c) of FINRA's By-Laws and FINRA Rule 1122 constitutes a violation of FINRA Rule 2010.



This case was reported in FINRA Disciplinary Actions for July 2018.

For details on this case, go to ...  FINRA Disciplinary Actions Online, and refer to Case #2016049359301.