U4 & U5 Filing Process: Purpose & Overview

Instructor: Bianca Ince

Bianca has FINRA Series 7, 63, SIE licenses and has licensing program at her firm for 5+ years.

In this lesson, we will review FINRA's U4 and U5 filing processes required for all registered representatives. We will also discuss the purpose of these filing processes and the impact on the securities market.

U4 & U5 Procedures and Purpose

Tina is a new employee with ABC Investments. She is required to obtain her series 7 and 66 licenses for her new role. However, before she can schedule her exams she must first complete FINRA form U4.

Registered representatives have many reporting responsibilities mandated by Financial Industry Regulatory Authority (FINRA). Of these many reporting requirements, the filing of the U4 and U5 forms are two of the most important.

Form U4

During new hire orientation, Tina learns that she will need to complete FINRA U4, which must be approved by FINRA before she can take her exams. The HR representative, Jason, explains that FINRA Form U4 is the Uniform Application for Broker-Dealer Registration and is used to register new individuals and register existing licensed individuals under a different employee.

The employing firm of the applicant sponsors their registration. In most cases, an individual has to be employed with a member firm to maintain an active FINRA license. Tina is new to the industry, so this will be her first time registering with FINRA. She has some questions that Jason answers.

U4 Overview

  • What information must be provided on form U4?

Personal information including name, date of birth, SSN, and address history just to name a few. Tina will need to provide her fingerprints, which are used by FINRA to conduct an extensive background check.

  • How is the completed U4 form submitted to FINRA for approval?

The U4 is completed and submitted electronically via the Central Registration Depository (CRD), or via the Investment Advisor Registration Depository (IARD).

  • How long does it take for FINRA to approve form U4?

The typical timeframe is 2-3 weeks to receive a decision from FINRA. The process can take longer if Tina provides inaccurate or incomplete information on the form.

After Jason provides an overview of the form, Tina begins completing her U4 form online. She is easily able to provide all of the requested information and moves quickly through the form. However, she becomes very concerned when she reaches the criminal disclosures section. Let's find out what happens next.

U4 Criminal & Financial Disclosures

Tina was arrested almost two years ago, and received a misdemeanor conviction for disorderly conduct. She fears that including this charge on her U4 may result in FINRA denying her for registration.

Her lawyer advised her the conviction could be expunged from her record after 3 years, but it has only been two. Tina discusses asks Jason about it.

Criminal and Financial Disclosure Overview

  • What must be disclosed on form U4?

All felony charges and convictions, theft-related misdemeanors, bankruptcies, and/or financial judgments against the applicant must be disclosed. Misdemeanors for non-theft-related crimes do not need to be reported, only theft-related misdemeanor convictions.

  • Can you be denied for registration due to a criminal charge/conviction?

Yes. Applicants with any felony conviction or theft-related misdemeanor conviction can be denied registration by FINRA.

Tina is relieved that she does not need to disclose her misdemeanor conviction, since it is not theft-related.

Form U5

Let's jump forward a bit. After Tina had been a registered representative at ABC Investments for almost three years, she decides to move to a different state to live with her fiance. After providing her resignation, she learns that the firm will be filing form U5 to terminate her employment.

FINRA form U5 is also called the Uniform Termination Notice for Securities Industry Registration and is filed to notify FINRA of employment termination, whether voluntary or involuntary. After form U5 is filed, the Tina's license will be inactive status until she re-registers with a different member firm. Her license can remain inactive for up to two years, after which she would need to retake the FINRA exams.

Importance of U4 & U5 Filings

The filing of forms U4 and U5 has a large impact on the securities industry. Form U4 allows FINRA to regulate which applicants are approved for registration. Those who omit or provide information inaccurate information can be denied registration.

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