// Add the new slick-theme.css if you want the default styling
July 2nd, 2018
securities
ENHANCEMENTS TO FINRA’S DISCLOSURE REVIEW VERIFICATION PROCESS PERMITS FIRMS TO RELY ON PROCESS FOR COMPLIANCE WITH PUBLIC FINANCIAL RECORDS SEARCHES OF APPLICANTS AND REGISTERED PERSONS

Beginning on July 9, 2018, FINRA is enhancing its disclosure review process to enable it to conduct a public records search of information relating to bankruptcies, judgments and liens, within fifteen calendar days from the date of an applicant’s Form U4. These enhancements will allow FINRA to verify the accuracy and completeness of an applicants’ information relating to all bankruptcies, judgments and liens reported to the Central Registration Depository (CRD) system through the Form U4. Currently, FINRA only conducts a search of public financial records for all registered persons on an annual basis.

If this search by FINRA reveals information different from what was reported in an applicant’s Form U4, FINRA will notify the member firm with which the applicant is associated within fifteen calendar days from the date the Form U4 is filed. Then, if the firm files an amended Form U4 with the updated disclosure, FINRA will not assess a late disclosure fee, as long as the amended Form U4 is filed no later than 30 calendar days after the applicant first learns of the event.

Member firms may also rely on FINRA’s new verification process to comply with the requirement under FINRA Rule 3110(e), regarding the responsibility of members to investigate applicants for registration by conducting a search of public records relating to the applicant’s bankruptcies, judgments and liens. Therefore, if a member firm does not receive notice from FINRA regarding the results of its public records search within fifteen calendar days after the filing of an applicant’s Form U4, the firm is deemed to have satisfied its obligation to conduct a public records search of information relating to bankruptcies, judgments and liens for that applicant.

These enhancements to the disclosure review process will enable FINRA to verify the accuracy and completeness of information relating to bankruptcies, judgments and liens in a more expedient manner. These enhancements are also likely to reduce the costs to firms associated with conducting these public records checks, will likely result in more timely reporting of disclosure information to the benefit of regulators, investors and firms, and result in a significant reduction of late disclosure fees related to judgments and liens.

SHARE THIS ARTICLE:
NEWSLETTER
VISIT US