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Regulatory Sanctions

You Failed to Amend Your U4 - What Made it ‘Willful’?

June 29, 2018

by Howard Haykin


“Willful” - (of an immoral or illegal act or omission) intentional; deliberate.
“Willfully” - with the intention of causing harm; deliberately; with a stubborn and determined intention to do as one wants, regardless of the consequences.


CASE #1.  A veteran broker with Voya Financial Advisors was fined $5K and suspended for 8 months. He WILLFULLY FAILED to amend his Form U4 to disclose that he was charged with 2 felonies and pled guilty to a felony involving the operation of a motor vehicle while intoxicated. As a result, the broker continued to be associated with his member firm for nearly 4 years while he was subject to statutory disqualification. [FINRA AWC #2016051985001]


►   In November 2010, while associated with Voya, broker was arrested and charged with 2 felonies relating to operation of a motor vehicle while intoxicated. While he should have updated Form U4 within 30 days thereafter (i.e., by 12/24/2010), he failed to do so at any time during his employment with the Firm.


►   In June 2011, while associated with Voya, broker pled guilty to one felony count of operating a motor vehicle while intoxicated. That conviction subjected him to statutory disqualification, so he should have updated Form U4 within 10 days (i.e., by 6/17/11). Again, he failed to disclose the conviction on his Form U4 at any time during his employment with the Firm.


CASE #2.  A newbie broker with Wealthforge Securities was suspended for 5 months. [No fine due to his financial status.] He WILLFULLY FAILED to disclose 2 state regulatory actions against him on his Form U4. [FINRA AWC #2017054651901]


►   In February 2013, the Washington State Department of Financial Institutions suspended and fined this individual for performing escrow services without appropriate licensure.


►   In August 2014, the California Department of Business Oversight barred this individual for, among other things, making fund transfers between his escrow company's trust account and its operating account.


►   Upon filing an initial Form U4 in May 2016, broker failed to disclose the Washington or the California disciplinary actions.


CASE #3.  A veteran broker seeking to register with Ramcon Financial was fined $10K and suspended for 9 months. He WILLFULLY FAILED to timely disclose 2 customer arbitrations and 6 written customer complaints on a Form U4. [FINRA AWC #2012035284301]


►   On January 22, 2014, broker filed a Form U4, seeking to register, among other things, as a General Securities Representative and General Securities Principal with Ramcon; his Form U4 was held to be deficient and was not approved.


►   In 2013, 7 customer disputes were filed, with the earliest being January 14th and the latest being December 23rd.


►   Broker conceded that he knew of the 2 arbitrations and 3 of 7 cited customer complaints before filing the Form U4. However, he said his failure to disclose was not willful because he had delegated the responsibility to update his Form U4 to others.



  • Article V, Section 2(c) of the FINRA By-Laws requires … an associated person to keep the Form U4 "current at all times," and file any amendments to the Form U4 "not later than 30 days after learning of the facts or circumstances giving rise to the amendment." If the amendment involves a statutory disqualification, the amendment must be filed within 10 days after the disqualification occurs. A person is subject to statutory disqualification if he or she has been convicted of any felony within 10 years of the date of the filing of an application to become associated with such a member.


  • FINRA Rule 1122 prohibits … filing with FINRA information regarding 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 … requires each FINRA member and its associated persons to observe high standards of commercial honor and just and equitable principles of trade. Violations of Article V, Section 2(c) of FINRA's By-Laws and FINRA Rule 1122 constitute a violation of FINRA Rule 2010.


These cases were reported in FINRA Disciplinary Actions for June 2018.
For details on any case, go to ...  FINRA Disciplinary Actions Online, and refer to the Respective AWC Number.