Notification of Status Changes
When an agent's employment situation changes, the USA requires notifications from multiple parties (not just the agent). This section covers the triple notification requirement and Form U5.
Triple Notification Requirement
When an agent begins or terminates a connection with a broker-dealer (BD) or issuer, all three parties must promptly notify the Administrator:
- The agent
- The former employer (BD or issuer)
- The new employer (BD or issuer), if applicable
This triple notification ensures the Administrator always has current information about agent associations.
Form U5: Uniform Termination Notice
When an agent is terminated from a BD, the BD files Form U5 through the Central Registration Depository (CRD)/Web CRD.
Filing Requirements
- Form U5 must be filed within 30 days of the agent's termination
- The BD must disclose the reason for termination and whether it was related to violations, fraud, or complaints
Form U5 Termination Categories
| Termination Reason | Description |
|---|---|
| Voluntary | Agent resigned of own accord |
| Permitted to resign | Agent was allowed to resign but was under investigation or facing potential termination |
| Discharged | Agent was fired |
| Deceased | Agent died while associated with the firm |
| Other | Circumstances that do not fit other categories |
Additional Disclosures on Form U5
The BD must also disclose:
- Whether the termination was related to violations of investment-related laws, failure to supervise, fraud, or customer complaints
- Any internal review findings that contributed to the termination
Agent's Right to Comment
The agent has the right to add a comment to the Form U5 if the agent disagrees with the BD's characterization of the termination.
Exam Tip: Gotchas
"Permitted to resign" is NOT the same as a clean voluntary resignation. If a BD allows an agent to resign rather than be fired due to misconduct, the BD must disclose this on Form U5. The exam tests whether a specific termination scenario requires disclosure of the underlying reason.