It is incumbent on the firm to evaluate, and if necessary disclose, any event that is material to a client or prospective client’s evaluation of the firm’s business or the integrity of its management. 0000007020 00000 n If you were initially charged with a felony that was later lessened to a misdemeanor, or dismissed, the felony charge still needs to be disclosed. To Disclose or Not to Disclose on Form U4, That is the Question. That may include an event that occurred more than 10 years ago, but because of its serious nature, it may remain material in the firm’s efforts to be totally transparent to its clients. x�bb2g`b``Ń3� ���ţ�1� � �Se Charges or convictions of a felony for activities that occurred in an organization that the individual exercised control over; Misdemeanor charges or convictions involving investments or investment related business, or fraud, false statements or omissions, wrongful taking of property, bribery, perjury, forgery, counterfeiting, or a conspiracy to commit any of these offenses; Incidents involving a federal regulatory or state regulatory agency, or foreign financial regulatory authority; Incidents involving state authorities that supervise banks, savings associations, or credit unions, state insurance commission, federal banks agency or National Credit Union Administration; Incidents involving any self-regulatory organization – defined as “Any national securities or commodities exchange, any national securities association (e.g., FINRA), or any registered clearing agency.”. Whether it is reportable on Form U4 is dependent upon whether it is a sales practice violation. focuses its practice on securities and financial services law and complex business disputes. At all times an investment adviser has a duty to provide any and all information that is material to a client of the firm. I recently worked with a young advisor from a wirehouse in the Northeast. When you move from one home to another, one of the last things that you are considering is whether you have updated your residential address history with FINRA; however, you are required to do so. As such, financial advisors must disclose every lien no matter how quickly they might make payment upon being notified of its existence. Form U4 sets forth instances where customer complaints must be disclosed. The Form ADV is used to register with the SEC and/or various state jurisdictions as an investment adviser. While he eventually made full restitution for the bad check and was able to enter and complete a pre-trial intervention program, he was still required to disclose the matter to his firm. A registered representative in New York was fined $5,000 and suspended from association with any FINRA member for six months for willfully failing to amend his Form U4 to report a felony charge and its resolution. Sometimes, a failure to disclose even the most mundane or long forgotten youthful indiscretions could lead to career-damning consequences, essentially costing the advisor his job and the potential of being banned from the securities industry. Form U4 and U5 Interpretive Questions and Answers Below is a list of Frequently Asked Questions (FAQ) regarding a registered person’s reporting obligations with respect to Forms U4 or U5. 0000001189 00000 n The operative word in the Form U4 for these events is “ever”—as in, “Have you ever been charged with a felony?” Even if the charges were dismissed, they still must be disclosed. 2. Misdemeanor charges or convictions involving investments or investment related business, or any fraud, false statements, or omissions, wrongful taking of property, bribery, perjury, forgery, counterfeiting, extortion, or conspiracy to commit any of these offenses; Incidents involving the Securities and Exchange Commission (“SEC”) or the Commodity Futures Trading Commission (“CFTC”); Incidents involving any federal regulatory agency, any state regulatory agency, or any foreign financial regulatory authority; Incidents involving any Self-Regulatory Organization or Commodities Exchange; Revoked or suspended authorization to act as an attorney, accountant, or federal contractor; or. 555 17 Failure to look at credit history or accepting it at face-value and not doing any due diligence is a practice that is certain to get the company in trouble.

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