CRD Frequently Asked Questions

Late Disclosure Fee Frequently Asked Questions

 

Timely and complete reporting of all information required by the FINRA By-Laws and rules, as well as the federal securities laws is critical. The Securities and Exchange Commission, FINRA, other self-regulatory organizations and state securities regulators use the information to make licensing and registration decisions, among other things. FINRA also uses the information in FINRA BrokerCheck, which investors use for researching the professional backgrounds of firms and brokers. To further encourage firms to file timely and complete Forms U4 and U5 and amendments to these forms, FINRA charges a late disclosure fee when a firm fails to report a disclosure event in a timely manner. Below is a list of frequently asked questions regarding the late disclosure fee.

 

Late Disclosure Filings

 

1. What form filing types are subject to the late disclosure fee?

Any Form U4 amendment, initial Form U5 and Form U5 amendment that reports a new disclosure event (i.e., contains a new Disclosure Reporting Page (DRP)) or a status update to a previously reported disclosure event (i.e., contains an amended DRP reporting a change in status) is subject to the late disclosure fee. Broker-Dealer form filings (Form BD and Form BD amendments) are not subject to the late disclosure fee.

 

2. What is a disclosure event?

A disclosure event is any matter covered by the questions on Forms U4 and U5 that pertain to criminal actions; regulatory disciplinary actions; civil judicial actions; customer complaints, arbitrations and civil litigations; terminations; and financial matters (Questions 14A through 14M on Form U4 and Questions 7A through 7F on Form U5).

 

3. When is a form filing considered late?

The circumstances under which a form filing generally will be considered late are set forth in the chart below.

 

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

 

4. If a late form filing contains an affirmative response to a disclosure question or a change in a response to a disclosure question (e.g., "yes" to "no" or "no" to "yes") and does not include a DRP reporting a new disclosure event or a change in status to a previously reported disclosure event, will the filing trigger the late disclosure fee?

No. FINRA assesses a late disclosure fee only on form filings that report details on a DRP of a new disclosure event or a change in status to a previously reported disclosure event.

 

5. Is a late disclosure fee assessed if an amended form filing is submitted in response to a CRD deficiency or inquiry letter and the form filing includes an amended DRP that adds additional details (e.g., docket/case number, comment) or clarifies previously reported details but does not report a change in status of the disclosure event?

No. FINRA will not assess a late disclosure fee in cases where a 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 timely reported).

 


Late Disclosure Fee Calculations/Assessments

 

1. How much is the late disclosure fee?

The late disclosure fee is $100 for the first day a form filing is late and $25 for each subsequent day, up to a maximum of $1,575.

 

2. Is the late disclosure fee assessed in addition to the $110 disclosure review fee?

Yes. The late disclosure fee is a separate fee and is assessed in addition to the $110 disclosure review fee.

 

3. How is the late disclosure fee assessed?

FINRA assesses the late disclosure fee starting on the calendar day following the last date on which the event was required to be reported under FINRA rules. In most cases when a firm submits a late disclosure filing, the CRD system will calculate the late disclosure fee and debit the firm's CRD Daily Account $100 for the first calendar day and $25 per calendar day thereafter, up to a maximum charge of $1,575. In certain cases, the late disclosure fee may be charged manually (for example, a disclosure event that subjects a person to a statutory disqualification must be reported within 10 days rather than 30 days).

 

4. Which DRP fields will be used to calculate 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 registered person learned of judgment/lien.

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


5. How many late disclosure fees will be assessed if a single form filing contains more than one late disclosure event (i.e., the form filing contains multiple DRPs reporting different late disclosures)?

If a single form filing contains more than one late disclosure event, only one late disclosure fee will be assessed. In such circumstances, FINRA will assess the late disclosure fee based on the disclosure event that has been outstanding the longest.

 

6. What should a firm do if it wishes to dispute a late disclosure fee?

The CRD system automatically assesses a late disclosure fee at the time a form filing is submitted if a disclosure event is not reported in a timely manner. In limited circumstances, a firm may be eligible to receive a reduction or refund of a late disclosure fee. For example, an adjustment to a late disclosure fee may be appropriate when a firm does not timely file an amended U4 updating a bankruptcy disclosure because the representative who obtained a bankruptcy discharge did not receive notice of the order within 30 days. A late disclosure fee adjustment also may be appropriate when a firm reports the wrong date of an event or its disposition due to a clerical error. In such situations, a firm should contact FINRA Registration and Disclosure staff by calling the Gateway Call Center at (301) 869-6699 to have the matter researched, and if appropriate, an adjustment made to the late fee.

 


CRD Accounting

 

1. How can firms determine if they have been assessed a late disclosure fee?

Firms can determine if FINRA has assessed a late disclosure fee through either the Accounting or Reports functions in the CRD system. With respect to the Accounting function, a firm can determine if FINRA has assessed a late disclosure fee by viewing its Daily Account Queues (i.e., Processed Transactions and Funds Deficient Transactions) or its Daily Account Information (i.e., Transaction Detail and Bill Line Search). To use the Reports Function to determine if FINRA has assessed a late disclosure fee, request the Accounting-Late Disclosure Fee Report. Various other Accounting Reports (e.g., Account Activity and Account Activity by Category) can also identify late fee assessments. These reports provide monthly account activity details for the firm, with the data available for the previous 13 months.

 


Tips for Reducing and/or Avoiding the Late Disclosure Fee

 

Firms can take the following steps to reduce and/or avoid the late disclosure fee:

 

  • Actively monitor the CRD Outstanding Disclosure Letter Notice Queue to identify and address aged disclosure requests. This Queue is available on the Web CRD Site Map in the "Firm Queues" section of the column heading "Individual." Instructions for finding the Queue and a description of what is contained within the Queue can be found in the Firm Queues For Individuals Navigation Guide
  • Use an amended DRP (not a new, duplicate DRP) to report a change in status to a previously reported disclosure event. To avoid creating a duplicate DRP, amend an existing DRP by using the "edit" function rather than the "create" function.
  • Consider requesting an Ad Hoc Report that identifies all "current" U4/U5 disclosures with a pending status (i.e., not yet resolved/final). To request an Ad Hoc Report, firms can contact the Gateway Call Center at (301) 869-6699. Please note that FINRA assesses fees for Ad Hoc Reports.
  • Set up an automatic e-mail notification by designating an individual to receive firm notifications outside of the CRD system by email.
Last Updated: 3/21/2014