Why are U5 termination disclosures now making it so difficult for advisors?
Those with this type of disclosure are asking us what changed and why they now have so few options. The short answer is to read the recent proposed Rule change regarding Rule 4111.
For years FINRA has been tightening the noose on firms hiring brokers with a “history of misconduct” by more frequent audits, increased scrutiny of membership applications, risk monitoring, broker-dealer scorecards, and a wave of Enforcement investigations targeting this group. But now FINRA is looking to hit the firms where it matters most; in their pocketbook.
Through the proposed rule, FINRA will have access to a broker-dealer’s money which they will be required to “maintain a specific deposit amount, with cash or qualified securities, in a segregated account at a bank or clearing firm, from which the member could make withdrawals only with FINRA’s approval.
Few if any member firms are sitting on mountains of cash to hold in reserve; none of which will count towards their Minimum Net Capital Requirements. The changes exacerbate the harm caused by false or trumped-up allegations commonly put onto the exiting broker’s U5. Landing at a top firm with a favorable payout will be nearly, if not entirely, impossible as these changes are implemented.
Please call me at 720-613-2044 if making your record clean is important to your business.
Regards,
Josh Barber
Executive Director D: 720-613-2044 F: 720-452-0613 The information contained herein has been obtained from reliable sources however may not be accurate and is not guaranteed by us. Readers are encouraged to undertake their own independent investigation and evaluation of the relevant facts. All claims and allegations are subject to adjudication, decisions may be subject to appeal, and no inference is intended, nor should any inference be made from any information contained herein from any source. This posting and the information on our website is for general information purposes only. This content should be not considered legal advice, and any responses, comments, e-mails, other communications do not form any attorney client relationship. As Frank Burns said, “If I made any mistakes in this article, they are God’s will or someone else’s fault.” Kevin J Palmer Kevin Palmer Kevin Palmer Scottsdale Kevin Palmer Arizona Economic Justice Economic Oppression Peace through Prosperity Financial Freedom Activist Financial Literacy Economic Dignity Resist https://thequietrich.com/tag/rebel-magazine/
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