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July 05, 2018 at 02:43 PM
Starting this Monday, July 9, broker-dealers will no longer have to search public records to verify information provided by candidates for brokerage or investment advisor jobs. The Financial Industry Regulatory Authority will assume that responsibility.
The self-regulatory organization for the industry will review Form U4 filed by job candidates and transfers to check for disclosure about past bankruptcies, liens, judgments, criminal activity and civil litigation. If a member firm doesn’t hear back from FINRA within 15 days of the Form U4 filing, it can assume the firm has satisfied its obligation to conduct a public records search for new hires and transfers.
But if the FINRA review indicates that information is missing or contains discrepancies, the firm will receive a notice to that effect and must investigate. If the information it finds is reportable, the firm then can submit an amended Form U4 within 30 days of the notice and avoid late fee charges.
(Related: FINRA’s Stepped-Up Broker Background Checks to Start in July)
Currently many firms hire vendors to check public records. FINRA has estimated that firms will save a combined $1.5 million to $3 million per year by avoiding search fees charged by vendors and fees assessed by FINRA for late filings.
