Personal Finances and Your Registration

Customers sometimes ask whether a poor credit rating or a personal bankruptcy could negatively impact their ability to get licensed to work in the securities industry. Here is some information about how your personal financial situation may affect your registration process … Continue reading

Customers sometimes ask whether a poor credit rating or a personal bankruptcy could negatively impact their ability to get licensed to work in the securities industry. Here  is some information about how your personal financial situation may affect your registration process.

First an important caveat: this is not legal advice and, as an education company, Solomon Exam Prep provides this information for educational purposes only. Please consult with a compliance professional to identify and address any issues regarding your situation or your state’s regulations. Always check with your compliance department regarding compliance issues.

1. Be sure to disclose relevant information on Form U4.

Form U4 is the registration form for broker-dealer agents and investment adviser representatives. It asks several questions about your history, including some on your finances. Such questions include whether you or a company you controlled have been subject to a bankruptcy within the past ten years. Answer these questions completely and honestly! Failing to disclose this information could jeopardize your ability to work in the securities industry–it could result in a statutory disqualification.

2. You may be denied registration based on insolvency.

If the state securities administrator discovers that you are insolvent (meaning that you can’t pay your debts), they may deny your registration if they feel that it is in the public’s interest.

3. You may be denied registration based on your financial history.

FINRA may deny your registration based your answers to the questions on Form U4. This means that FINRA could deny your registration if:
-you or a company you controlled have been subject to a bankruptcy within the past ten years
-a bonding company denied, paid out on, or revoked a bond for you
-you have unpaid legal judgments or liens

4. You may be denied registration for having a poor credit history.

Having a poor credit history could result in your registration being denied. Regulators may require applicants to submit balance sheets, and the information on such sheets will be factored into the overall decision of whether to approve or deny your application.

5. Your application for registration will not be automatically accepted if you have financial issues that are required to be reported on Form U4.

If you report financial problems on your application, it will not be automatically accepted. Instead, it will be transferred to a manual review process.

6. Once you are registered, you may lose your registration due to poor credit, bankruptcy, or insolvency.

Even if you are already registered, you are still required to report certain events by updating Form U4, and your registration is still subject to review when you do so.

7. You may be able to get registered even if you don’t have a spotless financial history.

Regulators are looking out for your customers and they want to collect all relevant information so they can stop problems before they start. They will only deny your registration if they feel it is in the public’s interest.

If a checkered financial history fit with other red flags, such as a criminal record or a history of regulatory violations, then a denial would be more likely. However, an isolated financial incident would be less likely to cause regulators to deny a registration. Regulators look at each case individually.

Note that regulations vary by state, and that in some states regulators will not look at your credit rating when evaluating your application. Certain regulators may also allow you to send your information before you apply, so you can see whether they would accept your application. For more information, contact your state securities administrator. Contact information may be found on the NASAA’s website.

Reminder: this is not legal advice and is provided for educational purposes only. Please consult with a compliance professional to identify and address any issues regarding your situation or your state’s regulations. Always check with your compliance department regarding compliance issues.

 

Sources:

Form U4

Form U4 Instructions

“Why Bad Credit Is Bad For Financial Careers”

4 thoughts on “Personal Finances and Your Registration”

  1. What is the likelihood of getting Series 7 and 66 licensed if bankruptcy and bad credit were the result of bipolar illness but now it is under contol. I stlll have bills to pay but I am slowly digging myself out. Thoughts/comments.

  2. As a subsequent comment to my to my predecessor question, I used to have an amazing law business with FICO SCORES OF OVER 700. I lost everything to ill health. Once again I would appreciate your comments.

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