Over-burdened from regulatory compliance

Disclosure of Judgments, Liens, and Bankruptcy

Bad credit happens.  Unfortunately, for Investment Advisors it can have career ending consequences.

Many advisors anguish over consequences of disclosing past credit judgments or liens, knowing that failure to report and late reporting is a serious risk. But, don’t give FINRA a valid reason for fine, suspension, or even statutory disqualification. Over-burdened from regulatory compliance Advisors should be aware that FINRA compares disclosure on the U-4 and amendments with their own public search results to help them identify undisclosed events.  And, if they find out before you tell them, it makes matters worse. 

Other advisers anguish that Bankruptcy filings are publicly available through the FINRA brokercheck systems and could harm their reputation or reflect poorly on their character and financial judgment. Its true, details of a person’s background are often used to evaluate the essence of a person’s character. However, failure to disclose and then later being caught having not reported, adds to the problem by reflecting dishonesty or lack of follow up and organizational skills. The best approach is to be straight forward about the situation and be prepared to explain. 

FINRA is bringing down the hammer on firms and brokers with undisclosed credit judgments and liens. In March 2015, FINRA flagged several cases where firms’ brokers did not disclose information, finding as many as 3400 instances at a single firm.

The rules are clear. Brokers and firms have 30 days to report adverse credit incidences by making amendments to their form U4. It is the responsibility of Advisors and firms to know and follow the rules. Between a changing regulatory landscape, and busy day to day activities, firms can easily fall short in their due diligence and responsibility.

Read:  Common FAQs FINRA form U4

Mistakes and failure to report is a costly problem for firms and advisors. Prospective employers are responsible to be aware of the rules when hiring employees. Failure to look at credit history or accepting it at face-value and not doing any due diligence is a practice that is certain to get the company in trouble. It’s very important that firms and individuals maintain records to back up reporting, as this can help resolve conflicts later on.

Outsourcing compliance responsibilities allows Investment Advisors, and Broker-Dealers relief knowing that regulatory obligations are satisfied, so they can proceed confidently and focus more of their efforts on growing the practice.  Additionally, having a relationship with a compliance and registration firm keeps advisors on the leading edge of being prepared for and managing regulatory changes.

RND Resources, Inc is a full-service compliance, registration, and accounting firm providing support exclusively to investment and financial professionals.  We have over 30 years of expertise in regulatory and compliance issues.  Our services cover issues as simple as back office support to complex litigation. Call RND at  to discuss your needs and reserve an expert to handle your compliance and registration issues.

Tarik Munisoglu is our VP of Customer Relations and can be reached at (818) 835-7105. or feel free to call our office at (818) 657-0288.

Need more information? Feel free to contact us below with any questions

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