Notice 15-05 (p. 6)); FINRA Board Approves Amendment to Supervision Rule Requiring Firms to Conduct Background Checks on Registration Applicant (press release April 24, 2014). FINRA Background Checks. Understand your clients’ strategies and the most pressing issues they are facing. Number 8860726. She had a fee sharing arrangement with her previous broker (who recently passed away). Registered in England and Wales. That said, while we expect FINRA to take a balanced and measured approach, actions by firms will speak louder than words. So she will need to report it at the new firm. Your U4 should remain clean. Upon learning of any unsatisfied judgments or liens, obtain court documents, checks, monthly statements, and any other records to prove payment, to verify the debt’s existence and any satisfaction thereof. The only reason I did a check was because my E&O asked me too. I understand her intention, all you needed to say was “southern belle.”. If FINRA chooses to adopt a “per violation” calculus in assessing fines, as they did in the 2004 late U4/U5 reporting sweep, the numbers we could be seeing could be significant. Thinks WB -I am still not sure how to handle this. One potentially aggravating fact, as described in the AWC, is that the firm became aware in February 2013 that they had a deficiency in this area and voluntarily took steps to amend their written supervisory procedures (WSPs) and put in a place a process to have payroll notify compliance. The firm’s Payroll Department periodically received garnishment notices from judgment creditors, tax levies, from federal or state taxing authorities and/or bankruptcy wage withholding orders and failed to have a process in place to notify the Compliance Department. She would drop her 7, but keep the 63 active. So whatever the case, check your employment manual and firm's internal policies to make sure there are no disclosure obligations. If a potential judgment or lien exists, amend and report it within thirty days (that is, respond “yes” to question 14M). Failure to do so can lead to fines, suspensions, or even being barred from acting as an investment adviser representative. In its annual Regulatory and Examination and Priorities Letter for 2015, FINRA specifically stated that it expected firms to have procedures in place to ensure timely and accurate reporting. I am worried of someone looking her up (assuming she gets in trouble) seeing a regulatory disclosure and wondering what type of person I am hiring. FINRA By-Laws provide that a firm is obligated to file an amended Form U4 no later than 30 calendar days after learning of the facts or circumstances that cause the firm to amend the U4. In November 2014, FINRA fined another member firm $12,500 for failing on several occasions to amend one representative’s Form U4 to disclose several judgments and IRS liens and develop and maintain supervisory procedures to disclose unsatisfied liens and judgments of registered representatives on Forms U4. Although the background investigation must be completed before filing a Form U4, and the public records check and Form U5 review within 30 calendar days and 60 calendar days, respectively, after filing the Form U4, FINRA indicated that these requirements are complementary and not duplicative. Performance & security by Cloudflare, Please complete the security check to access. Completing the CAPTCHA proves you are a human and gives you temporary access to the web property. Or does the SEC step in at this point? FINRA stated in its press release that the firm failed to adequately investigate the broker prior to hiring him, even though he was subject to twelve reportable events, including criminal charges and seven customer complaints. Good info. Thanks Morphius - Finding a good securities lawyer in my area is a bit tough. Hindsight review prompted by FINRA inquiry, determined that 16 garnishment notices required amendments to 13 registered representatives. Since I don’t deal with FINRA I should be ok. But it could be a small matter…or an enormous one (just saying to make your decision easier). For Investment Advisor Representatives (IARs)… Read more » FINRA fined the member firm $2.5 million for failing to supervise a broker who had stolen money from his customers and excessively traded their brokerage accounts. (Jean Eaglesham and Rob Barry,Stockbrokers Fail to Disclose Red Flags (March 5, 2014).) Lines and paragraphs break automatically. Fast forward nearly a year later, we are starting to see the repercussions of FINRA’s search and its discoveries. It’s a good amount of AUM, which is why I don’t want to walk away at this point.Ok, enough for now -these boards are starting to get addictive. The amended rule also requires that firms adopt written procedures that will require them to search public records to complete their pre-hire due diligence. We expect that 2015 will be the year for significant U4 reporting actions against firms. Ofcourse, I have NO IDEA if this is current information, or still applicable. Another way to prevent getting this page in the future is to use Privacy Pass. Payroll Protection Program and Form U4. The firm had also agreed at that time to have internal audit evaluate the effectiveness of its systems and procedures for U4/U5 reporting obligations. This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Power up your legal research with modern workflow tools, AI conceptual search and premium content sets that leverage Lexology's archive of 900,000+ articles contributed by the world's leading law firms. I wonder if Finra looks at 63 holders as much as they do 7’s. Outsized fines are here to stay for the foreseeable future when there are extensive lapses in timely amending U4s. sorry for my bad spelling. Questions? Seems like this would tarnish all the goodwill I have been working on in my town.

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