Information collected by this form may be accessed by employers, regulators and state governments depending on certain circumstances.
When a person is registered as an investment professional with the Financial Industry Regulatory Authority (FINRA), that person will be asked to sign what’s known as a Uniform Termination Notice for Securities Industry Registration (“U5”). This is sometimes referred to as a FINRA U5 Form. This form, which must be updated annually, tracks information about each individual broker-dealer termination. The FINRA website states that “The U5 contains information regarding why the termination occurred and any allegations of wrongdoing against the registrant.”
This article takes a closer look at this important document. It explains how it works, why it exists, who requires employees to fill out these forms, and how they are used by various regulators.
Understanding Form U5
The U5 starts off with basic identifying information about the terminated financial professional, including name, address, phone number, date of birth and Social Security Number. This information is then divided by section for “Regulatory Termination Events” and “Internal Termination.” These are further broken down into categories regarding the employee’s broker-dealer termination reason.
Depending on the type of termination that occurs, different sections must be filled out by either the company or broker-dealer. For example: A person who voluntarily terminates employment must only fill out Section (1) if their with an internal termination; whereas a person who was fired due to disciplinary action will need to complete Sections (2)-(8), depending on why they were let go.
This same process applies to both internal and regulatory terminations. After the form is complete, the broker-dealer must give it to the employee who signed it before sending along copies to administrators at FINRA.
Who Can Access Form U5?
The information collected on Form U5 is readily available to both employers and certain government agencies. For example, any employer can get a copy of an employees’ U4 or U5 forms by contacting FINRA’s Central Registration Depository (CRD) department. Each state also has its own database where this information can be found under different categories. This means that when someone applies for a new position within another company, the financial professional will have to disclose whether they were fired from their previous job or if they voluntarily chose to leave.
There are other instances in which the U5 reports are reviewed. The Financial Industry Regulatory Authority (FINRA) states that their regulatory staff can access these documents to monitor for unusual or suspicious activity, including “changes of job function, new hires with questionable qualifications, and reporting of negative information on former employers.”
Employees should also keep in mind that some state governments have the right to access Form U5 as well. This is usually done when someone applies for a professional license or wants to engage in business within this specific state.
When all is said and done, it’s important for financial professionals to understand how their actions can impact future career prospects. For example, filing false information on Form U4 or U5 could lead to fines up to $100,000 per offense. It can also get you banned from working in the industry for an indefinite period of time, depending on the severity of the situation.
If you are unsure about what should appear on your Form U5, contact your broker-dealer for guidance.
When to Consider Hiring a FINRA Defense Lawyer
If you are involved in an investigation or legal matter regarding Form U4 or Form U5, it is critical to seek the advice of a knowledgeable FINRA defense attorney knowledgeable in FINRA U5 Forms as soon as possible. An important part of investments is managing your future, as an advisor you understand this. It’s important to do everything in your power to protect your future and the future of your career.
A termination form called Form U5 is used to track information about financial professionals registered with FINRA. This document must be updated every year and contains information regarding why a broker or salesperson was terminated or left their previous job voluntarily. Information collected by this form may be accessed by employers, regulators and state governments depending on certain circumstances.