CRD FAQ - Form Filing for Individuals - Disclosure

I am doing a pre-hire check for an individual who has not been in the business since 11/96. What must I check to see if the individual has any disclosure?

When doing a Pre-hire check on an individual who has not been registered since 11/96, always check LEGACY disclosure. Disclosure information for individuals who were terminated as of 11/96 was not converted to the Web CRD format and will only appear in Legacy disclosure.

 

How do I review a Disclosure that has not yet been reviewed by the FINRA Disclosure Review staff?

Disclosures will not be available to view in Individual Query until they have been matched to an occurrence. Users can view the disclosure prior to this in two places: 1) the user can access Filing History and view the disclosure on the Form Filing, or 2) the user can look at the disclosure in their Disclosure Notice Queue. From this Queue the user can link to the disclosure.

 

What do the Exact or Explanation Date radio buttons mean on the DRPs?

Where indicated on the DRPs, the date fields will require the user to enter a date and indicate if the date is an exact date or an approximation of the date on which the event occurred. If the date is an approximation of the date, enter the approximate date in the format MM/DD/YYYY in the date field, mark the radio button titled 'Explanation' and provide an explanation in the text block. If the exact date is known, enter the date and mark the "Exact" radio button.

 

Should the disclosure questions be answered when submitting a Partial Form U5?

When filing a Partial Form U5, you need not answer the disclosure questions. They are not required to be answered when submitting a Partial Form U5 because all updates to an individual's disclosure information are reported through a Form U4 Filing.

 

What is the Material Difference Flag and whom does it affect?

The Material Difference Flag applies to dually registered individuals (RR/RR, RR/RA or RA/RA). This flag is set whenever a difference exists in any of the factual Form U4 DRP (Disclosure Reporting Page) fields for the same disclosure event (i.e., all DRP fields except for the last field, which is the Summary Detail/Representative Commentary Field). The flag acts as a notification to regulators that a difference exists.

 

Pending registration requests will not be approved until the difference is resolved. If the Material Difference Flag is not resolved by the respective filing firms within 30 days, the appropriate regulator(s) will be notified.

 

How is the Material Difference Flag viewed and how are firms notified?

The Material Difference Flag can be viewed under View Individual (Individual Composite Record), and in the specific Disclosure Occurrence(s) that triggered the flag. FINRA staff will send an inquiry or deficiency letter (as appropriate) to the Outstanding Disclosure Letters Queue for all firms with which the individual is currently registered.

 

How is a Material Difference resolved?

Firms are obligated to review the Disclosure Reporting Pages (DRPs) in question, identify the differences in the DRP details, and contact the individual and/or the other firm(s) to determine the basis for the Material Difference and how the difference can be resolved. Once the firm is notified, if the non-filing firm agrees with the information contained in the filing, the non-filing firm can submit a Concurrence Filing through Form Filing or the "Other Firm U4 Filing" Queue.

 

FINRA will notify the appropriate regulator if the Material Difference has not been resolved in 30 calendar days from the date the flag was set. The filing firm can submit an Amendment Filing to resolve the Material Difference, or both firms can agree on a revised version.

 

An individual is leaving Firm A to work for Firm B. Firm B relicenses that individual and, in doing so, updates a DRP. Firm A has not yet submitted a Form U5 for that individual. What is Firm A's responsibility? Does Firm A need to concur or amend the information prior to submitting a Form U5?

Firm A must submit either a Concurrence Filing or an Amendment Filing before it terminates the individual, and while the firm association remains open. If Firm A does not concur or amend before it terminates the individual, the termination does not resolve the discrepancy. If Firm A does not concur or amend within 30 days, regulators will be consulted to resolve the discrepancy.

 

What do the Statutory Disqualification codes on Web CRD mean?

Below are the definitions associated with the Statutory Disqualification (SD) codes. For additional information on the SD codes and an explanation of the SD Tier Categories, please refer to Chapter 5: View Individual in the Web CRD User's Manual.

 

BLANK: BLANK is the default SD status for individuals. Upon SD review by FINRA's Registration and Disclosure (RAD) staff, the status will change to CLEAR when it is determined that the individual is not subject to a disqualification.

 

CLEAR: CLEAR indicates that a review was required and completed by RAD with a determination that the individual was not disqualified as of the date of the last review.

 

NO: FINRA staff has reviewed the individual's disclosure information and determined that the individual is not subject to a statutory disqualification.

 

REQUIRES REVIEW: Individual's record requires review by FINRA Registration and Disclosure for purposes of determining whether the individual is subject to a disqualification.

 

SD-YES-Tier 1 / SD-YES-Tier 2 / SD-YES-Tier 3: FINRA staff has reviewed the individual's disclosure information, determined that the individual is subject to a disqualification and classified her/him into one of the designated SD Tiers.

• • If the individual's registration status is "Deficient," the member firm has not yet indicated whether it will sponsor the individual through FINRA's Membership Continuance process.
  • If the individual's registration status is "Termed," the member firm did not proceed with FINRA's Membership Continuance process.

If the individual's registration status is "Approved," more than likely the individual was already approved when he became subject to a disqualification.

 

SD-YES-APPROVAL/DENIAL PENDING - Tier 1 / SD-YES-APPROVAL/DENIAL PENDING - Tier 2 / SD-YES-APPROVAL/DENIAL PENDING - Tier 3: The individual is subject to a disqualification and has been classified into one of the designated SD Tiers. The individual is currently seeking regulatory approval to become associated with a FINRA member firm (i.e., a member firm has sponsored the individual and the application is being considered under FINRA's Membership Continuance process). A decision as to whether a FINRA registration will be approved or denied is currently pending.

 

SD-YES-APPROVED - Tier 1 / SD-YES-APPROVED - Tier 2 / SD-YES-APPROVED - Tier 3: The individual is subject to a disqualification and has been classified into one of the designated SD Tiers. The individual has received regulatory approval to become associated with a FINRA member firm. FINRA registration has been approved pursuant to Membership Continuance Proceedings. Users should review the current registration summary to determine if the approval is for the current FINRA member firm.

 

SD-YES-DENIED: The individual is subject to a disqualification and was denied permission to become associated with a FINRA member firm.

 

SD-YES-LIMITED - Tier 1 / SD-YES-LIMITED - Tier 3: Staff has reviewed the individual's disclosure information and determined that the individual is subject to a disqualification because he/she is barred from acting in one or more registration or functional capacities; however, the individual is not precluded from operating in one or more other capacities. For example, a person that is barred from acting in a supervisory capacity may be able to associate in a general sales (or non-supervisory) capacity, depending on the applicable order. The individual has also been classified into one of the designated SD Tiers.

 

SD-Timed Suspension/Bar: The individual is subject to a disqualification due to a timed suspension or bar, with no 19h-1 filing required.

 

SD-yes -SOX - Tier 1 / SD-yes -SOX - Tier 3: The individual is subject to a disqualification based on the Sarbanes-Oxley Act of 2002 and has been classified into one of the designated SD Tiers.

 

SD-yes-SOX- APPROVAL/DENIAL PENDING - Tier 1 / SD-yes-SOX- APPROVAL/DENIAL PENDING - Tier 3: The individual is subject to a disqualification based on the Sarbanes-Oxley Act of 2002 and has also been classified into one of the designated SD Tiers. The individual is currently seeking regulatory approval to become associated with a FINRA member firm (i.e., a member firm has sponsored the individual and the application or notice is being considered under FINRA's Membership Continuance Proceedings). A decision as to whether a FINRA registration will be approved or denied is currently pending.

 

SD- yes-SOX-APPROVED - Tier 1 / SD- yes-SOX-APPROVED - Tier 3: The individual is subject to a disqualification based on the Sarbanes-Oxley Act of 2002 and has been classified into one of the designated SD Tiers. FINRA registration has been approved pursuant to Membership Continuance Proceedings. Users should review the current registration summary to determine if the approval is for the current FINRA member firm.

 

SD- yes-Willful- Tier 1 / SD- yes-Willful- Tier 3: The individual is subject to a disqualification as a result of a sanction that is based on finding(s) of willful violations of the federal securities or commodities laws and has been classified into one of the designated SD Tiers.

 

SD- yes- Willful- APPROVAL/DENIAL PENDING - Tier 1 / SD- yes- Willful- APPROVAL/DENIALPENDING - Tier 3: The individual is subject to a disqualification as a result of a sanction that is based on finding(s) of willful violations of the federal securities or commodities laws and has been classified into one of the designated SD Tiers. The individual is currently seeking regulatory approval to become associated with a FINRA member firm (i.e., a member firm has sponsored the individual and the application or notice is being considered under FINRA's Membership Continuance Proceedings). A decision as to whether a FINRA registration will be approved or denied is currently pending.

 

SD- yes- Willful- APPROVED Tier 1 / SD- yes- Willful- APPROVED Tier 3: The individual is subject to a disqualification as a result of a sanction that is based on finding(s) of willful violations of the federal securities or commodities laws and has been classified into one of the designated SD Tiers. FINRA registration has been approved pursuant to Membership Continuance Proceedings. Users should review the current registration summary to determine if the approval is for the current FINRA member firm.