The answers to these questions are general in nature (not state specific), are not intended as a comprehensive review of this topic and do not include or account for all of the exceptions or variances involved in filing a Form U4 to register an individual as an investment adviser representative of a registered investment advisor firm.
The Form U4 is the Uniform Application for Securities Industry Registration or Transfer. Individuals seeking to register as an investment adviser representative (“IAR”) of a registered investment advisor firm typically must use this form to become registered with a state securities regulator. This document is filed electronically via the Central Registration Depository (“Web CRD”) system.
An individual seeking to register as an investment adviser representative with a state securities regulator will file an initial Form U4 via the IARD/Web CRD system. Typically, an individual does not submit his or her Form U4 until he or she has met the testing/designation prerequisite required by the state securities regulator. (An individual not currently registered with an investment advisor firm or broker-dealer will utilize the Form U10 online to open a Series 65 examination window; an individual currently registered with an investment advisor firm or broker-dealer will open the Series 65 examination window by submitting the Form U4.) In the event that the individual seeking to register as an investment adviser representative is also starting a state registered investment advisor firm, the Form U4 is often submitted at the same time the Form ADV and other registration documents are submitted to the state securities regulator since most state securities regulators require an investment advisor firm to have at least one individual registered as an investment adviser representative.
Yes, there are a few states such as New York and Wyoming that do not register individuals as investment adviser representatives and therefore do not require the filing of the Form U4. However, these state securities regulator may have an alternative requirements/filings related to minimum qualifications and designation of supervisors. For example, the New York Investor Protection Bureau requires an investment adviser representative of a state registered firm in New York to file the NY – IAQ. An investment advisor firm should consult the particular investment adviser representative rules of the securities regulator(s) in any state where the representative will conduct business.
The Form U4 is submitted electronically to the state securities regulator by the investment advisor firm on behalf of the investment adviser representative through the investment advisor firm’s IARD/CRD account.
The following is a list, not necessarily in order of the form, of information that needs to be provided by the investment adviser representative when completing a Form U4:
Although most state securities regulators do not require an investment adviser representative only applicant to submit fingerprint cards, the state securities regulators for Alaska, Arizona, District of Columbia, Georgia, Florida, Indiana, Maine and Ohio require fingerprint cards when registering as an investment adviser representative. In order to confirm whether a fingerprint card is required, an investment adviser representative applicant should review the most recent investment adviser representative registration requirements published by the applicable state securities regulator where he or she is requesting registration.
Whenever there is a material change to information that should be disclosed on the Form U4, the investment adviser representative has an obligation to update promptly that information. Typically, this means filing an amended Form U4 within 30 days of the material change. Failure to do so can lead to fines, suspensions, or even being barred from acting as an investment adviser representative.
Examples of information requiring an amendment to an investment adviser representative’s Form U4 are as follows:
Not providing proper disclosure for any information on the Form U4 may result in various sanctions including, but not limited to, fines, suspensions, or even being barred from acting as an investment adviser representative.
If the answers to any disclosure questions (i.e. criminal actions, regulatory disciplinary actions, customer complaints, arbitrations, civil litigation, termination, financial matters) on the Form U4 are “yes”, then the investment adviser representative is required to disclose additional details of the event or proceeding on the appropriate Disclosure Reporting Page (“DRP”) to the Form U4. Each category of items listed above has a unique DRP page asking for particular details of the disclosure event. Certain disclosure events will require multiple DRP updates. For example, when a matter arises (i.e. complaint received arbitration or litigation served, bankruptcy petition filed) and upon a change in the status or at final disposition of the matter (i.e. complaint settled, arbitration order issued, litigation settlement, bankruptcy discharged).
As a general rule, when an investment adviser representative leaves an investment advisor firm, the former investment advisor firm will file a Form U5 disclosing the termination of the investment adviser representative’s affiliation as an investment adviser representative with the former investment advisor firm. The new investment advisor firm that the investment adviser representative joins will file a Form U4 registering the individual as an investment adviser representative of the new investment advisor firm. As long as the individual registering as an investment adviser representative has not gone more than 2 years between registrations as an investment adviser representative and there are no “yes” answers, the transfer is usually smooth. There may be application fees associated with registering with the new investment advisor firm.
The Investment Adviser Public Disclosure (“IAPD) database allows public users to search for investment adviser representatives. The information published by the IAPD about the investment adviser representative includes qualifications, such as licenses, professional designations, and any exams passed; previous employment, including a list of firms where the investment adviser representative was previously registered, as well as any employment within the last ten years both inside and outside the securities industry; and a disclosure section which details any customer disputes or disciplinary events on the investment adviser representative’s record. The published information about the investment adviser representative is obtained through Form U4. Both the investment advisor firm and investment adviser representative are required to ensure the information on the Form U4 is accurate and up-to-date.
The Form U5 is the Uniform Termination Notice for Securities Industry Registration. Investment advisor firms must use the Form U5 to terminate with a state securities regulator the registration of an individual serving as an investment adviser representative. Similar to the Form U4, the Form U5 is filed electronically via the Web CRD.