Quick Answer
When an agent begins or ends a connection with a BD or issuer, or begins or stops the activities that make them an agent, the agent, the former employer, and the new employer must each promptly notify the Administrator. Failure by any one of the three is a separate violation.
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.
Who Must Notify the Administrator, and When?
There are two independent triggers. Notice is due when an agent begins or terminates a connection with a broker-dealer (BD) or issuer, or when the person begins or terminates the activities that make them an agent (a same-firm role change counts, in either direction). On a move between firms, 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.
Exam Tip: Gotchas
The notification duty runs to all three parties. Failure by any one of them, including the former employer, is a separate violation of the Act. The USA standard is "promptly," and the obligation applies both when an agent begins and when an agent terminates. Do not read the trigger as association-only: starting or stopping the activities that make someone an agent triggers it too, even with no change of firm. An operations employee who moves onto the sales desk, or a registered agent who moves to a purely clerical role, is a notice event.
How Does the Former Employer Actually Notify the Administrator?
The former BD satisfies its side of the triple notification by filing Form U5 (Uniform Termination Notice for Securities Industry Registration) through CRD/Web CRD. Form U5 is a FINRA filing requirement that carries out the USA's notification duty, not a separate USA obligation.
- The BD must file Form U5 within 30 days of the agent's termination
- Form U5 discloses the reason for termination: voluntary, permitted to resign, discharged, deceased, or other
- Form U5 also discloses whether the termination was related to violations of investment-related laws, failure to supervise, fraud, or customer complaints, plus any internal review findings that contributed to the termination
- 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
| 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 |
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 for misconduct, the BD must disclose that circumstance on Form U5, not report it as an ordinary voluntary departure.
What Should You Check on Exam Day?
- Two independent triggers: a connection change, or a change in the activities that make someone an agent, even at the same firm
- All three parties (agent, former employer, new employer) must notify the Administrator promptly
- Failure by any single party, including the former employer, is its own separate violation
- The former employer's notice takes the form of Form U5, filed within 30 days of termination
- "Permitted to resign" must be disclosed as its own category, distinct from a clean voluntary resignation