Published on:

FINRA Files Amendment With The SEC Regarding Disclosure Of Unsatisfied Lien/Judgment Information On Form U-4s

On August 19, 2013, the Financial Industry Regulatory Authority Inc. (“FINRA”) filed a proposed rule amendment with the Securities and Exchange Commission (“SEC”) seeking to revise the Form U-4 Uniform Application For Securities Industry Registration Or Transfer (“Form U-4”). A Form U-4 is completed by broker-dealers for registered associated persons, in order to file relevant information relating to the broker on the FINRA Web Central Registration Depository (“CRD”). In its proposed amendment, FINRA stated that the rule change was “non-controversial,” and requested that the SEC make the amendment effective immediately. Despite this request, the SEC will allow the public to provide comments to the proposed amendment. The SEC has stated in its announcement of the amendment that the change will not require any changes in the text of the FINRA rules (SEC Rel. No. 34-70227). Instead, the amendment adds to the information a broker-dealer is required to disclose in Section 14 of the Form U-4, specifically question 14M, regarding outstanding judgments and liens. Currently, the broker-dealer is required to disclose that a broker or registered representative is the subject of an unsatisfied judgment or lien within 30 days of the broker learning of the event. The broker-dealer responds “yes” or “no” to Question 14M and then completes a corresponding Disclosure Reporting Page (“DRP”) in order to provide further details. On the DRP, the broker-dealer need only disclose the date of the judgment/lien, not the date the broker learned of the event. The amendment to the rule would require broker-dealers to disclose the date the broker learned of the event. FINRA hopes this change would decrease the instances when FINRA sends late disclosure fee assessments to firms. All comments to this proposed rule change must be submitted within 21 days from the date the proposed rule was published on the Federal Register.

Lax & Neville LLP has nationally represented small broker-dealers, financial services professionals and securities industry companies in regulatory matters and securities-related and commercial litigation. Please contact our team of attorneys for a consultation at (212) 696-1999.

Contact Information