FINRA has considerably ramped up its enforcement efforts as of late to target those registered representatives who have failed to make the necessary disclosures on the Form U-4 with respect to the existence of tax liens, unsatisfied judgments, bankruptcies and “compromises with creditors.” Specifically, Questions 14K and 14M on the Form U-4 require a registered individual to disclose the existence of any tax liens, unsatisfied judgments, bankruptcies and compromises with creditors.
FINRA has reportedly been conducting its own background checks on registered representatives in order to ensure that its BrokerCheck data is accurate and up to date, and expects to complete the process by August 2015. Armed with its results, it has been cross-checking its CRD database and then issuing 8210 requests to registered representatives who have failed to make their required Form U-4 disclosures.
FINRA takes very seriously a broker’s failure to timely report these required financial disclosures on the Form U-4. Consequences can include a suspension, which may range from a couple of weeks to months, and a fine, which can vary depending upon the particular facts of the case, including how many unreported items exist, how long they have been in place and the reason for the broker’s non-disclosure.
There is also always the possibility that FINRA may conclude that the broker’s failure to update their Form U-4 was “willful” such that the broker could be deemed statutorily disqualified. In this area of law, a finding of “willfulness” can be based solely on the fact that the broker knew of the existence of the event that required disclosure, but failed to report it. A willful finding can seriously threaten a broker’s ability to conduct securities business.
If you have received a FINRNA inquiry for undisclosed liens, unsatisfied judgments or bankruptcies on your Form U-4, don’t go at it alone. Feel free to contact me for a confidential, no cost consultation on the process, your legal rights and strategic options. Call David Chase, Esq. toll-free at: 800-760-0912 or e-mail at: firstname.lastname@example.org