The Form U4, the Uniform Application for Securities Industry Registration or Transfer, is the form used by investment advisers, broker-dealers, or issuers of securities to register representatives in the appropriate jurisdictions and/or with the appropriate self-regulatory organizations. As a registered investment adviser, you must make the determination of which individuals in your firm will meet the definition of an investment adviser representative, complete a Form U4 for each individual, and submit it to the applicable state securities regulators in order for the investment adviser representatives to be properly licensed under the firm. However, it is important to understand that the obligation for completing the Form U4 does not stop once the investment adviser representative is licensed. Investment adviser representatives are obligated to amend and update the information required by the Form U4 as changes occur and not doing so can result in disciplinary actions.
Category Archives: Outside Business Activities
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Form U4 Information for Investment Adviser Reps Now Available Online to Public via IAPD
June 29, 2010
Pursuant to Release 2010.2 published on June 28, 2010 by the Investment Adviser Registration Depository (“IARD”), the Investment Adviser Public Disclosure (“IAPD) database now allows users to search for investment adviser representatives. Prior to the release, investment advisers and investment adviser representatives submitted registration and licensing information to the IARD; however, only information for investment adviser firms was available on the IAPD database. With Release 2010.2, effective June 28, 2010, the information investment adviser representatives have provided on Form U4 is publicly available through the IAPD database.
Registered Investment Advisors Need to Monitor Outside Business Activities of Investment Advisor Representatives
September 07, 2009
The establishment of policies and procedures designed to monitor the outside business activities (“OBAs”) of supervised persons (i.e. officers, directors, partners, investment advisor representatives, and employees) should be part of every registered investment advisor firm’s written compliance programs. RIA Compliance Consultants, Inc. suggests that some type of “outside business activities form” be created and all supervised persons be required to complete the form on an annual basis and whenever changes are needed. A supervised person should disclose and seek approval of an outside business activity prior to engaging in the activity.
A registered investment advisor has a fiduciary duty to disclose all real and potential conflicts of interests to clients as well as all material arrangements. Often times this broad requirement encompasses outside business activities the registered investment advisor considers non-advisory and would otherwise not disclose to clients. For example, a registered investment advisor that spends only 10% of its time on investment advisory activities and 90% of its time on non-advisory activities is required to disclose this fact. It must be made clear to all clients that the registered investment advisor will not devote all of its time to investment advisory functions unlike other registered investment advisor firms whose only activity is acting as an investment advisor.
FINRA’s Proposed Rule 3110 May Extend the Scope of Broker-Dealer Supervision of Investment Advisors
July 16, 2008
FINRA’s (The Financial Industry Regulatory Authority) proposed rule 3110 would expand the supervision responsibilities of broker-dealers by requiring broker-dealer principals to supervise business that the firm’s registered representatives engage in, regardless of whether such activity requires registration as a broker-dealer. The current FINRA rules require broker-dealer firms to designate a registered principal to supervise each type of business that requires registration as a broker-dealer, and additionally require registered representatives to notify their broker-dealer and get written approval for outside business activities.
Ohio Prohibits Mortgage Brokers & Loan Officers From Obtaining Referral Fee From Affiliated Registered Investment Adviser
July 01, 2007
In the most recent quarterly Ohio Securities Bulletin, the Ohio Division of Securities, which is the regulator of state registered investment advisers in Ohio, noted a recent position taken by its sister division, the Ohio Division of Financial Institutions, which regulates banks and mortgage brokers, since it may have implications to registered investment advisers registered affiliated with banks or mortgage brokers in Ohio.
The establishment of sound policies and procedures aimed at monitoring the outside activities of its supervised persons (i.e. the advisor’s officers, directors, partners, investment advisor representatives, and employees) should be part of any firm’s written compliance programs. It is suggested that some type of “outside business activities form” be created and all supervised persons be required to complete the form on an annual basis and whenever changes are needed. Besides the human resources reasons for monitoring outside business activities, there are two important regulatory reasons: (a) Form ADV disclosure purposes, and (b) Form U4 disclosure purposes.
End of Year Compliance Items – Part 2
January 02, 2006
This is the second entry in a series of blogs RIA Compliance Consultants is posting concerning annual compliance requirements and end of year filings. While we are trying to touch upon the items that all advisor firms are required to complete, it is important that you refer to your regulatory authority to ensure you have an all inclusive list of the requirements your firm must meet. If your firm has questions or concerns about one of the items listed in this entry, please give us a call to discuss how we can help your firm meet its regulatory obligations.