Form U4 Basics: Part Five – OBAs, Regulatory Events and Terminations

Wrapping up the U4 Basics blog post series, today, we’ll look at three other U4 disclosure areas: outside business activities, regulatory events, and terminations.

OBAs (outside business activities) are to be disclosed in Item 13 of the Form U4. Note the detail that is sought about each activity, to include the name whether it is investment-related, address, your title, start date, and approximate time devoted to the business during trading hours, and a description of your duties. Note also that the U4 disclosure, and corresponding Form ADV brochure disclosure for IARs, is in addition to the OBA notice that must be given to broker-dealers pursuant to FINRA Rule 3270.

Regulatory Actions. Questions 14C through 14G deal with regulatory actions. Formal investigations, as well as enforcement actions must be reported on the U4, and the information must be kept updated as proceedings progress along to a final disposition. When disclosing regulatory actions, be cautious not to contradict official findings from the regulators in situations where you have agreed, perhaps through a settlement of the matter, not to make a public statement contradicting the findings of the regulators. Work with experienced legal counsel to help ensure you properly report the action on your U4, and provide a reasonable explanation or comment in response to it where appropriate.

Terminations. When terminated by a broker-dealer or RIA, certain events need to be disclosed in response to question 14J of the Form U4. Likewise, these disclosures may be needed even if you left the firm voluntarily or were permitted to resign. If your U5 was marked up with a yes answer to a termination question, odds are good you will have to carry that disclosure onto your Form U4, even if you disagree with your former firm’s findings or report. Be sure to work with an experienced lawyer to help navigate you through these U5 and U4 issues.

If you have questions about how to complete a Form U4, or whether a matter is required to be disclosed, consult legal counsel. To speak with an experienced securities regulation attorney, contact us today.