Identify Reportable Disciplinary Events - Securities Industry Essentials SIE

1. Identify the red flag: A representative is "permitted to resign" while under internal review. What must be filed?

   Form U5 with an accurate reason and disclosure details. FINRA requires full disclosure on termination forms when resignation occurs amid investigations to prevent concealment of potential violations.

2. Identify the red flag: A rep has repeated tax liens. What category of disclosure is implicated?

   Financial disclosure (liens/judgments). Tax liens fall under reportable financial matters on Form U4, indicating potential instability or non-compliance with obligations.

3. Which bankruptcy event is a reportable financial disclosure for an associated person?

   Personal bankruptcy filing (or being a debtor in bankruptcy). FINRA requires disclosure of bankruptcy filings on Form U4 as they may signal financial instability affecting suitability for handling client funds.

4. Identify the required action: A rep files for personal bankruptcy. What is the general reporting deadline?

   Report via U4 amendment within $30$ days. Bankruptcy filings must be disclosed promptly on Form U4 as they are financial red flags under FINRA rules.

5. What is the reporting deadline for a regulatory action such as a suspension or bar by a regulator or SRO?

   Within $10$ days. Such actions often result in statutory disqualification, necessitating quick reporting to ensure compliance with FINRA membership rules.

6. Which form is used to report certain events after registration, such as criminal charges or bankruptcy?

   Form U4 amendment (or Form U6 for certain events). Amendments to this form or submissions via the regulatory disclosure form ensure ongoing reporting of post-registration events like criminal charges or financial issues.

7. Which civil financial event is a reportable red flag: judgment/lien or only late payments?

   Judgments and liens are reportable red flags. Unsatisfied judgments or liens must be reported on Form U4 as they represent financial red flags potentially impacting professional reliability.

8. What is a reportable "customer civil litigation" event for a representative?

   Civil suit by a customer alleging sales practice misconduct. Litigation involving allegations of misconduct like unauthorized trading requires reporting on Form U4 to track patterns of customer disputes.

9. What is a statutory disqualification (SD) in the SIE context?

   A disqualifying event that can bar or restrict registration. Under the Securities Exchange Act, such events subject individuals to restrictions, preventing association without FINRA approval.

10. Which form is used to register and update a registered representative's disclosure history?

    Form U4. This uniform registration form is required for individuals seeking registration with broker-dealers and must be updated to reflect changes in disclosure history.

11. What is the general reporting deadline for most reportable disclosure events to FINRA/CRD?

    Within $30$ days of the event or learning of it. FINRA rules require prompt reporting of most disclosure events through amendments to maintain accurate registration records.

12. Which criminal events are always major red flags for registration: misdemeanor or felony?

    Felonies (and certain investment-related misdemeanors). These events indicate potential unfitness for registration, requiring disclosure on Form U4 to protect investors and maintain industry integrity.

13. Which is the red flag: customer complaint about rudeness or complaint alleging unsuitable recommendations?

    Complaint alleging unsuitable recommendations. Allegations of unsuitability constitute sales practice violations, making them reportable red flags unlike mere interpersonal issues.

14. What is the firm's general obligation regarding disclosures: may it omit details to protect a rep's privacy?

    No; disclosures must be complete, accurate, and timely. FINRA mandates full transparency in disclosures to ensure investor protection, prohibiting omissions regardless of privacy concerns.

15. Identify the required action: A state regulator suspends a rep. What is the reporting deadline?

    Within $10$ days. Suspensions trigger statutory disqualification, mandating expedited reporting to FINRA for membership compliance.

16. What is a reportable "customer arbitration" event for a representative?

    Arbitration claim alleging sales practice violations or fraud. Such claims must be disclosed if settled for $15,000 or more, or if unresolved, as they indicate potential sales practice violations.

17. Which form is used to report a registered representative's termination and related disclosures?

    Form U5. This form must be filed by firms to notify FINRA of a representative's termination, including any related disciplinary or disclosure details.

18. What is the name of the public disclosure report system for registered representatives?

    BrokerCheck. FINRA's public tool allows investors to access disclosure reports on registered representatives and firms, promoting transparency in the securities industry.

19. Identify the required action: A rep is terminated for policy violations involving customer funds. What form is filed?

    Form U5. Terminations involving misconduct with customer funds require detailed reporting to alert regulators and protect the public.

20. What is the reporting deadline for a customer complaint that must be reported to FINRA?

    Within $30$ days (if reportable under rules). Reportable customer complaints must be disclosed promptly if they allege misconduct like fraud or theft exceeding certain thresholds.

21. Which regulator actions are reportable: only SEC actions or also state and SRO actions?

    SEC, state regulators, and SRO actions are reportable. Disciplinary actions by any securities regulator or self-regulatory organization must be disclosed to ensure comprehensive oversight.

22. What is the reporting deadline for a felony conviction or guilty plea by an associated person?

    Within $10$ days. Felony convictions trigger statutory disqualification, requiring expedited reporting to FINRA for assessment of continued registration eligibility.

23. What is the name of the system used to file and view broker-dealer and rep disclosures?

    FINRA CRD (Central Registration Depository). This centralized system managed by FINRA maintains registration records and disclosure information for broker-dealers and associated persons, enabling filing and viewing of required reports.

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