Good news has come from FINRA regarding Form U4 and how advisors are required to report certain data. FINRA has filed a proposed rule change with the SEC that changes the current Uniform Application for Securities Industry Registration or Transfer, more commonly referred to as Form U4. Originally created to ensure financial advisors recorded moves to different jurisdictions, made the proper disclosures, and updated there administrative information, FINRA is now working to clarify the way in which disclosures are reported.
In the past, if an advisor had any unsatisfied judgments or liens, it had to be reported through Form U4 within 30 days. The initial form didn’t include any question about when the advisor learned of the lien or judgment against them, however, which could result in unnecessary late disclosure fees for the advisors. For example, if a judgment was issued against an advisor and the notice was sent to an old or incorrect address, the knowledge of that situation could take more than 30 days to come to light, yet he/she could be fined for failing to report it.
In order to correct this, FINRA has amended the form to include a field where advisors can enter the date on which they learned of the judgment or lien, and thus start the 30 days from that point.
Because this rule is considered “non-controversial,” under SEC rules, it is effective immediately.