CRD Frequently Asked Questions

Late Disclosure Fee 

 

Timely and complete reporting of all information required by the FINRA By-Laws and rules and the federal securities laws is critical. Firms must make timely and complete reporting of required information, especially disclosure information, as a key part of their compliance program. This information is essential to FINRA, exchange, and federal and state regulatory programs. It also is relied upon by investors using the FINRA BrokerCheck Program. To encourage members to file timely and complete Forms U4 and U5 and Amendments to such forms, as required by FINRA By-Laws, and to act as an additional disincentive to late filing, FINRA has established a Late Disclosure Fee. The Securities and Exchange Commission (SEC) has announced the immediate effectiveness of amendments to Section 4 of Schedule A to the FINRA By-Laws establishing a late fee of $10 dollars per day, up to a maximum of $300, to be assessed by FINRA against members that fail to timely report a new disclosure event or a change in the status of a disclosure event previously reported on an initial Form U5, an amendment to a Form U5, or an amendment to a Form U4 as outlined in Notice to Members 04-09.

 

These frequently asked questions are intended to assist firms and to provide tips for tracking pending disclosure events and submitting timely disclosures to help avoid unnecessary late fee charges. A list of links to the specific questions is also included.

 

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Background/Transition Period

 

Why was the Late Disclosure Fee established?

As outlined in Notice to Members 04-09 , the late fee is an additional mechanism to help ensure that members make required disclosures on Forms U4 and U5 in a timely manner. In this context, disclosure events generally refer to events that require affirmative answers to the questions on Forms U4 and U5 that elicit information about criminal actions, regulatory disciplinary actions, civil judicial actions, customer complaints, terminations, and financial matters (currently, Questions 14A-M on the Form U4 and Questions 7A-F on the Form U5). Disclosure events must be reported either 1) on an Initial (i.e., Initial, Dual or Relicense) Form U4 or Initial Form U5 filing, if the triggering event occurred prior to the date of such filing; or 2) on an Amendment filing within 30 days of a triggering event (10 days for events that subject an individual to statutory disqualification).

 

The receipt of timely and complete information about members and their registered persons is essential to FINRA's fulfillment of its role as a self-regulatory organization. FINRA relies on information reported by its members for, among other things, determining compliance with net capital and reporting requirements and registration requirements. Information reported by members may form the basis for examinations and investigations and, ultimately, disciplinary action. Accurate disclosure is of particular importance to investors who are or who may be interested in doing business with a registered person and are seeking information regarding that person through the FINRA BrokerCheck Program. FINRA has established the Late Disclosure Fee to act as an additional disincentive to late filing and to encourage members to timely update Forms U4 and U5, as required. Of course, firms that fail to timely file amendments to Forms U4 and U5 may, in addition to paying the Late Disclosure Fee, be subject to disciplinary action.

 

Will the Late Disclosure Fee apply to form filings submitted prior to March 8, 2004?

No. The Late Disclosure Fee became operative on March 8, 2004 and will therefore be applied to U4 Amendment, Form U5 and U5 Amendment filings submitted on or after March 8, 2004.

 

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Late Disclosure Filings

 

Does the Late Disclosure Fee apply to Broker-Dealer form filings (e.g., Form BD Amendments)?

No, not at this time. Currently, the Late Disclosure Fee will only be assessed against Individual form filings that contain a late disclosure (i.e., Form U4 Amendments, Forms U5 and Form U5 Amendments).

 

What form filing types will trigger the Late Disclosure Fee when the reported disclosure is late?

Form U4 Amendments, Forms U5 and Form U5 Amendments, that report a new disclosure event (i.e., new DRP) or a status update to a previously reported disclosure event (i.e., amended DRP reporting a change in status).

 

When is a disclosure considered late, generally?

With respect to Initial, Dual or Relicense U4 filings and the Initial Form U5 filing, the individual and/or firm attests to the accuracy and completeness of the form when signing the appropriate signatory section of the Form U4 and/or Form U5, prior to the filing being submitted to CRD. Therefore, any disclosure events that should have been reported on the Initial, Dual or Relicense U4 or the Initial Form U5 will be considered late when subsequently reported on a Form U4 Amendment or Form U5 Amendment filing.

 

With respect to amendment filings, Article V, Section 2(c) of the FINRA By-Laws requires that every application for registration (Form U4) filed with FINRA be kept current at all times by supplementary amendments that must be filed with FINRA not later than 30 days after learning of the facts or circumstances giving rise to a reporting obligation. If such filing involves a statutory disqualification as defined in Section 3(a)(39) and Section 15(b)(4) of the Securities Exchange Act of 1934, such amendment must be filed not later than 10 days after such disqualification occurs. Article V, Section 3(a) of the By-Laws requires a member, not later than 30 days following the termination of the association with a member of a person who is registered with it, to give notice of the termination of such association to FINRA (Form U5). Article V, Section 3(b) of the By-Laws requires members to file an amendment to the Form U5 in the event that the member learns of facts or circumstances causing any information in the Form U5 to become inaccurate or incomplete, not later than 30 days after the member learns of the facts or circumstances giving rise to the amendment. 

 

What is a late disclosure for purposes of assessing the Late Disclosure Fee?

Generally, a Form U4 Amendment, Form U5 or Form U5 Amendment filing containing a newly reported disclosure event, or amended disclosure in cases where a change in status is being reported, will be considered late for purposes of assessing the Late Disclosure Fee as follows.

 

Form Filing Type	New DRP -or- Amended DRP Reporting Change in Status (e.g., from "Pending" to "On Appeal" or "Final" Disposition)	Disclosure Event Already Reported on Form U5 / U5 Amendment? Yes / No	DRP Late for Purposes of Late Disclosure Fee - If:
U4 Amendment	New U4 DRP	No	U4 disclosure event date is prior to Initial, Dual, Relicense U4 filing date (i.e., disclosure event should have been reported on Initial, Dual, Relicense U4 filing)
U4 Amendment	Amended U4 DRP reporting change in status	No	U4 DRP status/disposition date is prior to Initial, Dual, Relicense U4 filing date (i.e., individual was previously registered and status update should have been reported on Initial, Dual, Relicense U4 filing)
U4 Amendment	New U4 DRP	No	U4 disclosure event date is more than 30 days prior to U4 Amendment filing date
U4 Amendment	Amended U4 DRP reporting change in status	No	U4 DRP status/disposition date is more than 30 days prior to U4 Amendment filing date
U4 Amendment	New U4 DRP	Yes	U4 disclosure event is same as U5 disclosure event AND U4 DRP is submitted more than 30 days AFTER Form U5 or U5 Amendment filing date
U4 Amendment	Amended U4 DRP reporting change in status	Yes	Amended U4 disclosure event is same as U5 disclosure event AND Amended U4 DRP is submitted more than 30 days AFTER Form U5 or U5 Amendment filing date
U4 Amendment	New U4 DRP or Amended U4 DRP reporting change in status	N/A	U4 DRP event involves statutory disqualification AND U4 DRP status/disposition date is more than 10 days PRIOR TO U4 Amendment filing date
Form U5 or U5 Amendment	New U5 DRP	N/A	U5 DRP event date (if event if pending) is more than 30 days prior to Form U5 / U5 Amendment filing date -OR - U5 DRP status/disposition date (if DRP is reporting status update/final disposition) is more than 30 days prior to Form U5 / U5 Amendment filing date
U5 Amendment	Amended U5 DRP reporting a change in status	Yes	U5 DRP status/disposition date is more than 30 days prior to U5 Amendment filing date

 

Will the Late Disclosure Fee be assessed if the filing is submitted late in cases where a U4 Amendment filing is being submitted only to change the response to a Form U4 disclosure question from "yes" to "no" after the firm received notice that a particular bankruptcy or customer complaint occurrence had been automatically archived as a result of the sunset provision linked to the specific corresponding disclosure question?

No. A U4 Amendment will not trigger the Late Disclosure Fee when the only disclosure change is to amend a previous "yes" answer to "no." The Late Disclosure Fee applies only to U4 Amendment, Form U5 and U5 Amendment filings that include a DRP reporting a new disclosure event or a change in status to a previously reported disclosure event.

 

If a U4 Amendment, Form U5, or U5 Amendment filing contains affirmative responses to the disclosure questions or changes in responses to the disclosure questions (e.g., "yes" to "no" or "no" to "yes") and does not include any DRPs reporting a new disclosure event or a change in status to a previously reported disclosure, will the filing trigger the Late Disclosure Fee?

No. The Late Disclosure Fee is assessed on U4 Amendment, Form U5 and U5 Amendment filings that report details of a new disclosure event or a change in status to a previously reported disclosure event on DRPs.

 

Will the Late Disclosure Fee be assessed if a U4 Amendment or U5 Amendment filing is submitted in response to a CRD deficiency or inquiry letter, and the Amendment filing includes an amended DRP to add additional details (e.g., docket/case # , comment, etc.) or clarify previously reported details but does not report a change in status to the disclosure event?

No. The Late Disclosure Fee will not be assessed in cases where the firm is responding to a CRD deficiency or inquiry letter requesting additional or clarifying details, provided the amended DRP does not include a status update to the previously reported disclosure event (or, if it does, the status update is reported timely).

 

Instead of "amending" a DRP to report a change in status to a previously reported disclosure event, a new, duplicate DRP was created to report the updated details. Will the Late Disclosure Fee be assessed when the new, duplicate DRP is submitted since the disclosure event date is more than 30 days prior to the recently submitted form filing date?

Not if the dates are identical.  However, if the dates are not identical, the disclosure may not be recognized as a duplicate and the Late Fee will assess. Because the updated details were reported on a "new" DRP rather than an "amended" DRP, the CRD system will assess the Late Disclosure Fee on the filing containing the new, duplicate DRP as the event date is more than 30 days prior to the recently submitted form filing date. Provided the details regarding the updated status of the disclosure event were reported timely, this would be considered a clerical error and not a "late disclosure." As a result, Registration and Disclosure Analysts would identify the error when reviewing the DRP during the disclosure review process and proactively open a CRIS case to have the erroneous Late Disclosure Fee refunded.

 

In the event the updated details were reported late, regardless of the clerical error, Registration and Disclosure Analysts would refund the erroneous Late Fee amount (which would have been based on a calculation using the disclosure event date) and manually charge the correct Late Fee amount (based on a calculation using the status date (or final disposition date) reported on the new, duplicate DRP).

 

Will the Late Disclosure Fee be assessed when a U4 or U5 Amendment is submitted to correct a duplicate DRP error?

The Late Disclosure Fee will be charged when the firm submits a subsequent Amendment filing to correct the duplicate DRP error. Provided the status update was reported timely on the duplicate DRP filing, Registration and Disclosure Analysts would identify the erroneous Late Fee when reviewing the subsequent amendment filing submitted to correct the duplicate DRP error, and proactively open a CRIS case to refund the erroneous Late Disclosure Fee. 

 

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Late Disclosure Fee Calculations/Assessments

 

Is the Late Disclosure Fee assessed in addition to the $95 Disclosure Review Fee?

Yes. The Late Disclosure Fee is a separate fee and is assessed in addition to the $95 Disclosure Review Fee.

 

Will the Late Disclosure Fee be calculated utilizing calendar days or business days?

The Late Disclosure Fee will be assessed based on calendar days.

 

How will the Late Disclosure Fee be assessed?

FINRA will assess the Late Disclosure Fee starting on the day following the last date on which the event was required to be reported under NASD rules. In most cases when a member submits a late disclosure filing, CRD will calculate the Late Disclosure Fee and debit the firm's CRD Daily Account $10 per day, up to a maximum charge of $300. In certain cases, the Late Disclosure Fee may be charged manually (e.g., disclosure event triggers a statutory disqualification and the disclosure event is required to be reported in 10 days rather than 30 days). The Late Disclosure Fee will appear as a separate line item on the firm's CRD Accounting Statement.

 

Which Disclosure Reporting Page (DRP) fields will be used to assist in calculating the Late Disclosure Fee?

The following table identifies the specific DRP fields, by DRP type, that will be used to assist in calculating the Late Disclosure Fee.

 

DRP Type	New or Amended DRP	DRP Field
U4 Criminal DRP	New	Date First Charged
	Amended	Event Status Date
U4 Regulatory Action DRP	New	Date Initiated
	Amended	Resolution Date
U4 Investigation DRP	New	Notice Date
	Amended	Date Resolved
U4 Civil Judicial DRP	New	Filing Date of Court Action
	Amended	Resolution Date
U4 Customer Complaint/Arbitration/Civil Litigation DRP	New	Date Customer Complaint was Received (Customer Complaint) Date Notice/Process was Served (Arbitration) Date Notice Process was Served (Civil Litigation)
	Amended	Status Date (Customer Complaint) Disposition Date (Arbitration) Disposition Date (Civil Litigation)
U4 Termination DRP	New	Termination Date
	Amended	Termination Date
U4 Bankruptcy/SIPC/Compromise with Creditors DRP	New	Action Date
	Amended	Disposition Date
U4 Bond DRP	New	Disposition Date
	Amended	Disposition Date
U4 Judgment/Lien DRP	New	Date Filed
	Amended	Status Date
U5 Criminal DRP	New	Date First Charged (if pending) or Event Status Date (if on appeal/final)
U5 Regulatory Action DRP	New	Date Initiated (if pending) or Resolution Date (if on appeal/final)
	Amended	Resolution Date
U5 Investigation DRP	New	Notice Date (if pending) or Date Resolved (if final)
U5 Customer Complaint/Arbitration/Civil Litigation DRP	New	Date Customer Complaint was Received (if customer complaint is pending) or Status Date (if customer complaint is not pending) Date Notice/Process was Served (if arbitration is pending) or Disposition Date (if arbitration is resolved) Date Notice/Process was Served (if civil litigation is pending) or Disposition Date (if civil litigation is resolved)
	Amended	Status Date (customer complaint) Disposition Date (arbitration) Disposition Date (civil litigation)
U5 Termination DRP	New	Termination Date
	Amended	Termination Date

Will the CRD System automatically assess the Late Disclosure Fee at the time the form filing containing the late disclosure is submitted to CRD?
In most cases, the CRD System will automatically assess the Late Disclosure Fee at the time the form filing containing the late disclosure is submitted to CRD. Under certain scenarios, however, Registration and Disclosure Analysts will review the disclosure filing before making a determination on whether to manually assess a Late Disclosure Fee.

 

The Late Disclosure Fee assessment will be based on a comparison of the CRD form filing date, form filing type, specific Disclosure Reporting Pages (DRPs), whether or not the disclosure event had been previously reported by another form type, and the "event" date on a DRP reporting a new disclosure event or the "status" or "disposition" date on an amended DRP reporting a change in status to a previously reported disclosure event.

 

For example, if a Form U4 Amendment is submitted to report a criminal disclosure event that should have been reported on the individual's Form U4, the Late Disclosure Fee would be assessed by first determining whether or not the disclosure event should have been reported on the Form U4 (i.e., is the "date first charged" as reported on the DRP prior to or after the Form U4 filing date). If the "date first charged" field on the criminal DRP contains a date that is prior to the Form U4 filing date, the system will charge $10 per day, up to a maximum of $300, based on a comparison of the Form U4 Amendment filing date to the Form U4 filing date.

 

If a Form U5 Amendment is filed to report a customer complaint, and a Form U4 Amendment is subsequently submitted reporting the same customer complaint, the CRD System will assume the individual learned of the Form U4 reporting obligation as a result of the Form U5 Amendment filing. It will allow the individual 30 days from the filing date of the Form U5 Amendment, that initially reported the customer complaint, to submit the Form U4 Amendment before assessing a Late Disclosure Fee on the U4 Amendment filing when it is ultimately submitted, should it be late.

 

Will more than one Late Disclosure Fee be assessed if a single form filing contains more than one late disclosure (i.e., multiple Disclosure Reporting Pages (DRPs) reporting late disclosures)?

No. In the event a single form filing contains more than one late disclosure event, only one Late Disclosure Fee will be assessed per form filing.

 

How will the Late Disclosure Fee be calculated when a single form filing contains more than one late disclosure?

In this instance, the Late Disclosure Fee will be based on the disclosure event that has been outstanding the longest. For example, if a Form U4 Amendment is submitted to report three new disclosure events and one disclosure event is 15 days late, the second event is 20 days late and the third event is 30 days late, the firm will be assessed a Late Disclosure Fee of $300 based on the disclosure event that was reported 30 days late.

 

What should a firm do if it feels it was charged a Late Disclosure Fee incorrectly or in error?

While it is impossible to program the CRD system to account for every specific Late Disclosure Fee scenario, the system has been designed to account for the majority of them. There may, however, be circumstances in which the system under-charges or fails to charge. In these cases, Registration and Disclosure Analysts will adjust any incorrect charges by manually refunding the initial Late Fee, if appropriate, and manually charging the appropriate Late Disclosure Fee amount. Likewise, there may be limited circumstances under which the system over charges or incorrectly charges. Should this occur, FINRA Registration and Disclosure Analysts will be as proactive as possible in identifying and refunding any erroneous or incorrect charges. If you believe a Late Disclosure Fee was assessed in error or you have any questions, please contact FINRA Registration and Disclosure staff by calling the Gateway Call Center at (301) 869-6699 to have the matter researched. 

 

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CRD Accounting

 

How will the Late Disclosure Fee appear in a firm's CRD Transaction Detail?

The Late Disclosure Fee will display for each late fee assessed as follows: Individual's name, CRD#, FINRA, Form Type (U4 or U5), Late Discl Fee (or Late Disclosure Fee), number of days late, and the amount of the Late Fee. The fee amount will be determined based on the number of days the filing was submitted late, and will be calculated at a rate of $10 per each day late, up to a maximum of $300.

 

How can firms determine if they have been assessed a Late Disclosure Fee?

Firms can determine if a Late Disclosure Fee was assessed by either the Accounting or Reports functions in Web CRD. Under Accounting, a firm can determine if a Late Disclosure Fee was assessed by viewing its Daily Account Queues (i.e., Processed Transactions and Funds Deficient Transactions) as well as its Daily Account Information (i.e., Transaction Detail and Bill Line Search). Additional information regarding the Accounting functionality is available in Web CRD via Help and in Chapter 14 of the Broker-Dealer Firm Users' Manual that is available on this Web Site.

The FINRA Report Center provides a monthly Report Web CRD® Late Filing Fee Report identifying the number and total amount of U4 and U5 late fee assessments.  Under the Reports function in CRD, a firm can determine if the Late Disclosure Fee was assessed by requesting the Accounting-Late Disclosure Fee Report and download report. Various other Accounting Reports (e.g., Account Activity and Account Activity by Category) can also indentify Late Fee assessments. These reports provide monthly account activity details for the firm, with the data available for the previous 13 months. If a Late Disclosure Fee has been assessed, a firm will see: Individual's name, CRD#, FINRA, Form Type (U4 or U5), Late Discl Fee (or Late Disclosure Fee), number of days late, and the amount of the Late Fee. These reports provide monthly account activity details for the firm, with the data available for the previous 13 months. If a Late Disclosure Fee has been assessed, a firm will see: Individual's name, CRD#, FINRA, Form Type (U4 or U5), Late Discl Fee (or Late Disclosure Fee), number of days late, and the amount of the Late Fee.

 

"Late Discl Fee" appears on firm CRD Accounting Statements and Accounting Reports - What is "Late Discl Fee?"

"Late Discl Fee" is an abbreviation for Late Disclosure Fee. 

 

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Tips for Reducing and/or Avoiding the Late Disclosure Fee

 

What can a firm do to avoid being assessed the Late Disclosure Fee?

Firms can proactively do the following to reduce and/or avoid being assessed a Late Disclosure Fee:

 

 

In addition, firms can set up an automatic e-mail notification by designating an individual to receive e-mailed Firm Notifications outside of the CRD system. Instructions for setting up the receipt of e-mailed Firm Notifications is available.

 

Since some of the Disclosure Reporting Page (DRP) fields are used to assist in determining whether or not a disclosure event is reported late and to calculate the Late Disclosure Fee amount, how should the "Notice Date" and "Resolution Date" fields be completed on the Investigation DRP when reporting a FINRA investigation, particularly in cases where a FINRA investigation evolves into a formal FINRA complaint or proceeding or FINRA Acceptance, Waiver and Consent (AWC)?

When completing the Investigation DRP to report a FINRA investigation, the "Notice Date" field should reflect the date the Wells Notice was given. The "Resolution Date" reported on the Investigation DRP should be the date the individual was notified that the investigation was closed (i.e., either closed without action or closed and notice provided that a formal action would be initiated or a complaint filed).

 

How should the "Date Initiated" field be completed on the Regulatory Action DRP when reporting a FINRA complaint?

When reporting a FINRA complaint, regardless of whether or not the complaint was preceded by a formal FINRA investigation, the "Date Initiated" field on the Regulatory Action DRP should reflect the date the formal action or complaint was issued; it should not reflect the "notice date" of the FINRA investigation in cases where the formal complaint was preceded by an investigation.

 

How should the "Date Initiated" and "Resolution Date" fields be completed on the Regulatory Action DRP when reporting a FINRA Acceptance, Waiver & Consent (AWC)?

When reporting a FINRA AWC on a Regulatory Action DRP, the date of the Notice of Acceptance of the AWC should be reported in both the "Date Initiated" and "Resolution Date" fields.

 

How should the "Date Initiated" and Resolution Date" fields be completed on the Regulatory Action DRP when reporting a FINRA complaint that was resolved via an Offer of Settlement?

When reporting a FINRA complaint, the "Date Initiated" field on the Regulatory Action DRP should reflect the date the formal action or complaint was issued. When amending the DRP to report that the complaint has been resolved via an Offer of Settlement, the "Resolution Date" field on the DRP should reflect the date of the Notice of Acceptance of the Offer of Settlement.

 

When a FINRA investigation evolves into a formal FINRA action (e.g., complaint or Acceptance, Waiver and Consent), is the firm required to amend the previously submitted Investigation DRP AND submit a Regulatory Action DRP or will reporting the details on a single DRP suffice?

In cases where a FINRA investigation evolves into or triggers a formal FINRA complaint or proceeding, two DRP submissions are required. The previously submitted Investigation DRP should be amended to report the outcome of the investigation (DRP fields #3 and #4, "Describe briefly the nature of the investigation, if known, or details of the resolution" and "Date Resolved," should be completed). Also, details regarding the formal FINRA complaint or proceeding should be reported on a Regulatory Action DRP.

 

Please Note: While unrelated to the Late Disclosure Fee, firms should be sure to accurately report the Docket/Case # of the FINRA complaint or AWC on the Regulatory Action DRP. This field is often completed incorrectly and the investigation or examination number is provided instead of the docket/case number of the actual complaint or proceeding.