1.2.3.1. Form U4
This form must be filed for each of the broker-dealer’s registered employees. Form U4 contains detailed personal information including:
• Physical characteristics (i.e., height and weight, hair and eye color)
• Residential history
• Employment history and other businesses
• Criminal history
• Civil judicial proceedings
• Bankruptcy judgments and liens
• Customer complaints
• Prior terminations due to improper behavior
• Financial disclosures, such as bankruptcy proceedings
Whenever any of this information changes, such as a changed residence or a customer complaint, the employee and the member firm both have a responsibility to amend the Form U4 within 30 days. When an employee does something to disqualify himself from membership, the form must be amended within 10 days. Such events may include a criminal conviction or making false statements on an application
FINRA permits member firms to file changes to a registered employee’s disclosure information on Form U4 without obtaining the employee’s signature. However, prior to filing, the firm must make a reasonable effort to provide the representative with a copy of the amended disclosure information and obtain his written acknowledgment that the information was received and reviewed.
Before a registered employee approves the information on either an initial or amended Form U4, the employing firm must notify him that in signing the form he agrees to FINRA’s predispute arbitration clause. This clause states that the employee waives his right to sue a member, customer, or another associated person in court, except when that right is provided by the rules of the arbitration forum in which a claim is filed.
Failing to register an employee who should be registered may be deemed as conduct inconsistent with just and equitable practices and, when discovered, may be sufficient cause for appropriate disciplinary action.
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