Quick Answer
When an agent begins or ends a connection with a broker-dealer or issuer, or begins or stops the activities that make them an agent, the agent and that broker-dealer or issuer must each promptly notify the Administrator. A move between firms is two events, so three parties notify: the agent, the former employer, and the new employer.
When an agent's employment situation changes, the Uniform Securities Act (USA) requires notifications from multiple parties, not just the agent. This section covers who must give notice, and how the count of notifying parties changes with the facts.
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).
Each event puts the duty on two parties: the agent as well as the BD or issuer involved. How many parties notify in total depends on the facts:
| Situation | Who must promptly notify the Administrator |
|---|---|
| Agent leaves a firm with no new securities employer | The agent and the former employer |
| Agent moves from one firm to another | The agent, the former employer, and the new employer, because one connection ends and another begins |
| Agent stays with the same employer but begins or stops agent activities | The agent and that employer; no other firm is involved |
This allocation ensures the Administrator receives current information about agent associations. Appropriate uniform filings may carry the notices, but the statutory responsibility still reaches every party named above.
Exam Tip: Gotchas
The notification duty runs to the agent and the firm on each side of the change: all three parties on a move between firms, only the agent and the former employer when the agent leaves with no new employer, and only the agent and the current employer when agent activities start or stop at the same firm. Failure by any one of them, including the former employer, is a separate violation of the Act. A timely Form U5 may provide the former firm's notice, and a properly submitted signed Form U4 may carry the agent's and new firm's notices; no duplicative paper message is required merely for its own sake. The USA standard is "promptly," and it also reaches starting or stopping the activities that make someone an agent, even without a firm change.
How Does the Former Employer Actually Notify the Administrator?
The former BD satisfies its side of the notice by filing Form U5 (Uniform Termination Notice for Securities Industry Registration) through CRD/Web CRD. FINRA, other self-regulatory organizations, and state jurisdictions use Form U5 to terminate registration. The USA itself names no form; its standard is "promptly."
- Under the FINRA By-Laws, the BD must file the termination notice within 30 days after the termination and give the departing person a copy
- If the BD later learns facts that make the notice inaccurate or incomplete, it must amend it within 30 days of learning them, again with a copy to the person
- Form U5 discloses the reason for termination: voluntary, permitted to resign, discharged, deceased, or other
- Form U5 asks whether the individual was currently, or at termination, under internal review for fraud, wrongful taking, or violations of investment-related laws or standards
- Customer complaints, arbitrations, and litigation receive affirmative answers only when they meet the form's detailed allegation, status, amount, timing, and prior-reporting conditions; not every complaint connected to a termination is reportable
- The separate termination-allegation question applies when a voluntary resignation, discharge, or permitted resignation followed allegations of investment-related violations, fraud or wrongful taking, or investment-related supervisory failure
- The individual subject may add a brief statement only to give details for an affirmative internal-review answer, with the required acknowledgment and consent. The form does not give the individual a general comment field to dispute the firm's termination reason or explanation
| Termination Reason | Description |
|---|---|
| Voluntary | Agent resigned of own accord |
| Permitted to resign | The firm permitted the agent to resign, such as in place of a discharge; the form requires an explanation |
| Discharged | The firm fired the agent; the form requires an explanation |
| Deceased | Agent died while associated with the firm |
| Other | The form requires an explanation |
Exam Tip: Gotchas
"Permitted to resign" is not the same as a clean voluntary resignation. The form requires an explanation when the reason is Permitted to Resign, Discharged, or Other, but not when it is Voluntary. A separate question asks whether a resignation or discharge followed allegations of investment-related violations, fraud or wrongful taking, or a supervisory failure.
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
- Each event binds the agent and the BD or issuer involved: three parties on a move between firms, two on a termination or a same-employer activity change. Uniform filings may carry the notices
- The former employer files Form U5 within 30 days of termination under the FINRA By-Laws, and a timely Form U5 may carry its notice; the USA standard is "promptly"
- Form U5 uses a termination category plus defined disclosure questions; it does not ask for every complaint or every internal finding
- "Permitted to resign" must be disclosed as its own category, distinct from a clean voluntary resignation