The Important Difference Between Central Registration Depository Forms & Forms U4, U5
Well, it happened again last month. A testifying fact witness became confused about the Central Registration Depository (“CRD”), forms U4 and U5. He showed his unfamiliarity with this system by testifying that a certain activity would give the registered person a bad U4. He was confusing the form U4 with FINRA’s CRD System. An industry panel member would have picked up on this and the witness would have lost credibility.
Here is how the system works . . .
The Form U4 is the Uniform Application for Securities Industry Registration or Transfer. Representatives of broker-dealers, investment advisers, or issuers of securities must use this form to become registered in the appropriate jurisdictions and/or SROs. The form is completed by the broker-dealer and submitted to FINRA. For example, a broker-dealer would complete and submit this form when they hire a new registered representative, schedule an exam or submit a new registration in a particular state. Other entries on this form could include the following:
- Reporting a name and / or address change
- Criminal disclosures (Questions 14 A – B)
- Regulatory Action Disclosures (Questions 14 C – G)
- Civil Judicial Disclosure (Question 14 H)
- Report Customer Complaint, Arbitration or Litigation (Question 14 I)
- Termination Disclosure (Question 14 I)
The Form U5 is the Uniform Termination Notice for Securities Industry Registration. Broker-dealers, investment advisers, or issuers of securities have 30 days to use this form to terminate the registration of an individual in the appropriate jurisdictions and/or self- regulatory organizations (“SROs”).
There are three types of Form U5 filings:
- A full Form U5 is used when terminating an individual from the firm. All registrations with SROs and jurisdictions will be terminated,
- A partial Form U5 is used to terminate individuals from selected SROs and jurisdictions. The reason for termination and disclosure questions are not included on partial Form U5 filings. Residential addresses can be updated. Branch office address information cannot be updated, and
- An amendment Form U5 is used to update or amend disclosure, date of termination, reason for termination, and residential information on an individual already terminated from a firm. Terminated individuals are required to update any residential address changes for two years following an individual’s termination date.