Form U5 is a word often thrown around in the securities industry, yet many people are still unaware of what it means and its impact. If you work in securities with a firm as an investment adviser or a broker-dealer, it is highly important that you’re mindful of what this U5 Form is and how it can influence you as well as your career.

The effects of a U5 can be almost immediate, it is not like you will wait and find out the long-term effects, so the sooner you understand, the better it is.

Finra u5 form – a quick intro

The simplest way to explain what a Finra U5 Form is that it is called the Uniform Termination Notice for Securities Industry Registration. This document is used when a Registered Investment dealer or a broker-dealer resigns or has their contract terminated. The form is to be filed by the firm. When an individual has left the firm for any reason, the company is afforded thirty days within which the form should be filed and the reasons for leaving disclosed, or they may have to pay a late fee. Your immediate next step should be to work with legal counsel or an advocate immediately, and that too before the Finra Form U5 has been filed. It will give a little less than a month to strategize as the firm has thirty days to file the form.

Learn everything you need to know about finra u5 form

As you join a company, you are registered with the SEC, states, or exchanges as working with said broker-dealer firm or RIA firm. The Finra U5 Form will make it clear to Finra that you no longer work with the establishment.

The disclosure

In general, if the individual has resigned to move on for career growth or for any other reason, this will not be much of a problem though it is still safer to keep an eye on the U5 form. On the other hand, if the individual were under investigation and/or made to resign or were fired, this is cause for concern. If any of this is true, the firm will be sure to tell it in Form U5 Finra, and it can come back to haunt you as you move on to other firms.

Form U5 Finra is supposed to announce why the individual has left the firm – whether the person is deceased, has chosen to resign from the firm, if they were permitted to resign, or if they were discharged. Along with this, another category stating ‘other’ is available too though it is rarely used (most often utilized when the firm needs to lay off employees, take over by another firm, or for similar reasons).

Why does this form matter?

One of the main benefits of a Finra U5 Form is that it helps to ensure that regulations are maintained and that there is no space for malpractice. Consequently, if an individual decides to leave a firm, but they’re under investigation regarding compliance, allegations of some sort, or policy issues – such an event must be revealed and reported. These are all very grave problems and can severely affect the career of investment advisers.

Since form U5 must be submitted within thirty days of the adviser leaving the firm, the next job they look into can be affected. The future firm will take a look at the Finra Form U5 to guarantee that they’re signing on a trustworthy person. Suppose the firm discloses in the form that the individual was under inquiry for any reason. In that case, this will prompt FINRA to open up an investigation which can further lead to enforcement action.

What lawyers can do?

As you go for expert legal counsel, the lawyer will first interview you to get an understanding of the matter from your perspective. The next phase will be to contact the firm’s legal and compliance departments and speak to the relevant people regarding your U5 form. The key here is to collect as much information as possible about the firm’s perspective in this matter and see if the proposed Finra form u5 can be reviewed.

The firm’s view on your departure is a matter of importance as that dictates the language that will be used on the form. If your departure was favourable, you could expect encouraging language; if it’s otherwise, it is best to have it reviewed.

Note:

The full obligation falls on the firm, and they neither require nor will be interested in any input from the individual broker-dealer about the U5 language they use. At the same time, the individual can file an arbitration claim for defamation if they deem the U5 form filed is not fair. To avoid dealing with this, firms will often engage in negotiation with the individual or their lawyer.

Conclusion

While it is not technically a negotiation, it is still far better to have the firm change its U5 Form Finra language before it is filed than it is to deal with it after the filing is done. To keep your future prospects from being affected by the form, get a lawyer first thing as you leave the firm.

As awful as the effects of bad language in your Finra form u5 can be, the risk can be mitigated by employing legal counsel early on. At MAH Advising, with our team of experts, we’ll help you deal with any language your previous firm may be using on your U5 Form. Get in touch with us right away so we can strategize together for a better future.