As part of its modernization efforts, the Financial Industry Regulatory Authority has notified members of updates to its systems that will facilitate compliance with Form U4 recordkeeping requirements.
Representatives of broker-dealers, investment advisers or issuers of securities must be registered with the appropriate jurisdictions and/or self-regulatory organizations (SROs). The Form U4 (Uniform Application for Securities Industry Registration or Transfer) is used to establish that registration. The form is used to elicit employment history, disciplinary and other information about individuals to register them.
In Regulatory Notice 25-13, FINRA said that as of Oct. 10, members may rely on the Central Registration Depository (CRD®) system to maintain for recordkeeping purposes the Form U4 filings that individuals electronically sign through FINRA’s Financial Professional Gateway. (FinPro)
The notice was issued as part of a series of new initiatives announced last year called FINRA Forward, which among other things, are intended to modernize requirements, facilitate innovation and eliminate unnecessary burdens. Among the goals was reducing costs or creating efficiencies in the onboarding process for applicants seeking to become registered; as well as making the recordkeeping processes simpler and less challenging.
Currently FINRA allows members to streamline the work associated with the registration process by completing and electronically signing a Form U4 via FinPro Gateway. Members may also rely on CRD to satisfy their record retention requirements with respect to certain uniform registration form filings that do not require the registered person’s signature.
FINRA has now obtained additional no-action relief from the Securities and Exchange Commission to allow members to rely on CRD to satisfy their record retention requirements with respect to Form U4 filings that are electronically signed using FINRA E-Signature.
In the new regulatory notice, FINRA notes that Rule 1010(c) requires members and applicants for membership to file an initial or transfer Form U4 based on a signed copy of the form provided to the member or applicant for membership by the individual on whose behalf the form is being filed. In addition, any amendments to the disclosure information on Form U4 must be based on either a signed copy of the amended Form U4 provided to the member by the individual on whose behalf the Form U4 amendment is being filed, or the individual’s written acknowledgment that the disclosure information was received and reviewed.
FINRA says that it has now implemented expanded relief from the SEC staff: “To further simplify member compliance, FINRA has obtained no-action relief from the Staff to allow members to rely on CRD to satisfy the recordkeeping requirements under FINRA Rule 1010(c), Exchange Act Section 17(a) and Rule 17a-4 with respect to Form U4 filings that are electronically signed using FINRA E-Signature. Members are not required to rely on FINRA E-Signature to satisfy the requirements of Rule 1010(c).8 However, those members that choose to use FINRA E-Signature may also rely on CRD to maintain signed Form U4 filings to satisfy their recordkeeping requirements under FINRA Rule 1010(c), Exchange Act Section 17(a) and Rule 17a-4.”
FINRA said it will continue to evaluate other ways in which it can enhance its systems to support member compliance and reduce unnecessary burdens.
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