Today, we're going to answer the question “What is the Form U5?” Technically, the form is called the Uniform Termination Notice for Securities Industry Registration, and it is used whenever a person registered with a broker-dealer or a registered investment adviser terminates his or her resignations with that firm, either in part (with a state or two) or in full, meaning that he or she will not be registered with the firm in any capacity.
The U5 is filed within 30 days of your leaving a broker-dealer or RIA, and it discloses why you left – stating that you died, you voluntarily left the firm, you were permitted to resign, or you were discharged. There is also the “other” category that is rarely used, but might be appropriate when a firm is absorbed by another, when there are layoffs, etc.
The U5 is what tells FINRA, the exchanges, and the states to terminate, or end, your registration with that particular broker-dealer or RIA firm.
Your firm has an obligation to disclose certain events on the U5 as well. For example, if you left while under an internal review for a compliance related matter, that has to be reported. Likewise, if you left after there were allegations raised that you violated industry laws or rules, or firm policy, the firm will report that. And, the firm will also report allegations that you engaged in fraud or the wrongful taking of property. These are all serious disclosures, and could result in difficulty getting hired on at another firm, and may cause FINRA and some states to inquire further into the disclosure, which might lead to an investigation and an enforcement action against you.
Know that your U5 is serious, and can have a serious impact on your career. Coming up in this blog series, we'll dive deeper into the U5, and discuss two of the common disclosure – the internal review disclosure and the termination disclosure – and provide an explanation as to how those disclosures might impact your career.
If you have a U5 issue that you need assistance with, or expect to have a U5 filed soon because you have left a firm, we invite you to contact us to discuss your need. We routinely represent financial advisors across the country in regulatory and compliance matters.