Form U4 and Form U5

Every securities career begins with a Form U4 and ends with a Form U5. These two forms create a public record that follows registered persons throughout their careers and beyond.

Overview

• Both forms are filed by the firm, not the individual
• Both are publicly accessible through BrokerCheck, FINRA's free online tool that lets anyone look up a broker's background

Form U4: Registration

The Form U4 is used to register an individual with FINRA, self-regulatory organizations (SROs), and state regulators. It collects extensive background information, including employment history, disciplinary history, and financial disclosures.

Key U4 Disclosures

The individual must answer "yes" and provide details for any of the following:

• Criminal history: Felony charges or convictions, of any subject matter; misdemeanor charges or convictions that are investment-related, or that involve fraud, false statements, wrongful taking of property, bribery, perjury, forgery, counterfeiting, or extortion
• Regulatory actions: Sanctions by the SEC, states, or SROs
• Customer complaints: Written complaints alleging $5,000 or more in damages
• Terminations for cause: Discharged, or permitted to resign under investigation
• Financial disclosures: Bankruptcies, unsatisfied liens or judgments, bond denials
• Civil litigation: Lawsuits related to investment activities

Exam Tip: Gotchas

• Form U4 requires disclosure of charges, not just convictions. An individual charged with a felony must disclose it even before trial.
• Misdemeanor disclosure is not limited to securities offenses. A misdemeanor also counts if it involves fraud, bribery, perjury, forgery, or a similar dishonesty offense, even with no securities connection at all.
• Customer complaints must be reported at the $5,000 threshold even if the firm believes the complaint has no merit.

Update Obligation

• Form U4 must be updated within 30 days of any material change in disclosed information, but within 10 days when the change involves a statutory disqualification
• This is a continuing obligation; as long as the person is registered, they must keep their U4 current

Form U5: Termination

The Form U5 is filed when a registered person leaves a member firm. It tells regulators why the person left and whether any issues were pending.

What the U5 Must Disclose

• Reason for termination (voluntary, terminated, permitted to resign, etc.)
• Any pending customer complaints
• Internal reviews or investigations
• Regulatory investigations

Continuing Obligation

• The firm must amend the U5 if new information arises after filing
• This obligation continues until there is final disposition of any reportable matter
• After termination, individuals remain subject to regulator jurisdiction for at least 2 years

Exam Tip: Gotchas

• The firm files the U5, not the individual. U5 must be filed within 30 days of termination.
• The firm's obligation to amend continues even after the person leaves.

BrokerCheck

• BrokerCheck is FINRA's free public tool for looking up registered brokers and firms
• Available at brokercheck.finra.org
• Displays information from both Form U4 and Form U5
• Includes: employment history, licenses, customer complaints, regulatory actions, and financial disclosures
• Anyone can search; no account required

The annual BrokerCheck notice to customers

A member firm must also tell its customers that BrokerCheck exists. Once every calendar year, the firm must give each customer, in writing (electronic delivery counts), three items:

1. The FINRA BrokerCheck hotline number
2. The FINRA website address
3. A statement that an investor brochure describing BrokerCheck is available to the customer

Two exceptions change who must send it or when:

• An introducing firm (it only opens accounts that are held at another firm that is not a FINRA member, and it does not carry customer accounts or hold customer funds and securities) may give the information at or before the customer's first purchase. It does not need to repeat it every calendar year.
• A firm that has no customers is exempt. So is a firm that sends its accounts to a carrying firm (the firm that holds the accounts), when that carrying firm sends the annual notice.

Exam Tip: Gotchas

• Both Form U4 and Form U5 information is publicly available through BrokerCheck. Anyone can look up a broker's background.
• The annual notice points customers to BrokerCheck. The rule requires the hotline number, the website address, and the brochure statement, not a copy of any representative's record.
• The notice goes to customers, once per calendar year. Often confused: the Form U5 deadline of 30 days after termination is a different clock.

What Should You Check on Exam Day?

• Can you explain the difference in purpose between Form U4 and Form U5?
• Do you know who files Form U4 and Form U5, the firm or the individual?
• Can you state the deadline for filing Form U5 after termination, and for updating Form U4?
• Do you know the shorter update deadline that applies when a statutory disqualification is involved?
• Can you explain why BrokerCheck matters, and name the three items a firm gives each customer about it once every calendar year?