The end of the year is an excellent time to remind investment advisor representatives (IARs) of the duty to update their Form U4. In addition, investment advisor firms should be, at least annually, reminding IARs of their ongoing duty to update the U4. According to the U4 instructions, “an individual is under a continuing obligation to amend and update information required by Form U4 as changes occur.” A state regulator can take action against an individual for improperly reporting any information on the form. This is especially true for an individual’s employment background and disciplinary actions.
IARs must also keep in mind that when switching advisor firms, not only must the IAR transfer his Form U4 to the new firm, a Form U5 must be filed for the old firm. The Form U5 must also be filed when an IAR leaves the industry altogether. Continuing amendments must be made to the residential and disciplinary information contained within the Form U5. According to the Form U5 instructions, even after an IAR terminates from an advisor firm, the IAR may have to provide information about the IAR’s activities with the terminated advisor firm. Therefore, the IAR must forward residential changes for at least two years following their termination.
Finally, copies, with original signatures, of both the Form U4 and Form U5 must be maintained by the advisor firm and made available to regulators upon request.
If you have any questions regarding the Form U4 or need assistance with your firm’s licensing and Form U4/U5 procedures, give us a call.