A broker-dealer agreed to pay a fine of US $300,000 to resolve charges brought by the Financial Industry Regulatory Authority that it did not amend or timely amend information on file with FINRA for its registered representatives to report unsatisfied tax liens and civil judgments. The updating was required by FINRA rules. According to FINRA, from January 1, 2013, through June 30, 2015, the broker-dealer received 71 wage garnishment orders from courts and tax authorities for 57 registered representatives. FINRA claimed the firm did not consistently investigate whether these orders would necessitate amending the individuals’ registration application on Form U4 to disclose unsatisfied liens and judgments. As a result, said FINRA, in 41 instances, amended Form U4s were not timely filed or filed at all, as required. Last year another broker-dealer also agreed to pay a fine of US $500,000 to FINRA for its alleged failure to update its individual registrants’ personal information to disclose unsatisfied tax liens and judgments where it had been provided garnishment notices regarding such individuals. In that matter, FINRA also charged that, during the relevant time, the firm received wage garnishment orders from courts and tax authorities but did not have a procedure to determine whether the underlying event involved an event that required an update of the relevant individual’s registration information. (Click here for further information on earlier FINRA action in the article, “UBS Fined US $500,000 by FINRA for Not Reporting Salespersons’ Tax Liens and Judgments” in the March 15, 2015 edition of Bridging the Week.)

Compliance Weeds: Registration and membership applications with regulators cannot be forgotten once filed. Most applications, like Form U4 or National Futures Association Form 8R, place an affirmative obligation on individuals to amend and update information requiring disclosure promptly after a change occurs. FINRA has not hesitated to bring disciplinary actions against a broker-dealer where, in its judgment, the firm was on notice that its registrants’ disclosure information should have been updated but was not. (Click here for instructions to Form U4 and here for instructions to Form 8R describing this ongoing obligation.)