Morgan Lewis

FINRA Proposes Significant Changes to Forms U4 and U5

By Steven W. Stone, Mark D. Fitterman, John J. O'Brien, Ben A. Indek, Investment Management Practice

LawFlash/Client Alert

  • published on:

    03/05/2009

  • by:

    Investment Management Practice

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The Financial Industry Regulatory Authority (FINRA) recently filed with the Securities and Exchange Commission (SEC) a proposed rule change that, if adopted, would make significant changes in the reporting of certain disclosure items on the Uniform Application for Securities Industry Registration or Transfer (Form U4) and the Uniform Termination Notice for Securities Industry Registration (Form U5).

The proposed changes to Forms U4 and U5 will need to be published for comment and approved by the SEC before they can take effect, although FINRA has indicated that the changes, if approved, could be rolled out by May 2009.

The changes could impose a substantial administrative burden on member firms as they will be required to go back and review filed Forms U4 and U5 to amend those forms to reflect answers to newly added questions designed to identify "statutorily disqualified" persons. The amendments will also make a major change in the reporting of arbitrations and civil litigation where individuals are not named in the complaint but are named or identified in the body of the complaint.

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