Updated Jun 30, 2022
Are you looking to start a career in the financial or securities industries? Passing securities exams like the Securities Industry Essentials (SIE), the Series 6, or Series 7 isn’t the only criteria for getting registered to work in the industry. Your personal financial history may also factor into whether you can become licensed and land a job.
So could a poor credit rating or a personal bankruptcy negatively impact your ability to get licensed to work in the securities industry? Here’s 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 you can’t pay your debts), they may deny your registration if they feel that it’s in the public’s interest.
3. You may be denied registration based on your financial history.
FINRA may deny your registration based on 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. 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’re registered, you may lose your registration due to poor credit, bankruptcy, or insolvency.
Even if you’re already registered, you’re still required to report certain events by updating Form U4. 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. 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’s in the public’s interest.
If a checkered financial history fits 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.
Final Thoughts
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. Find contact information on 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.
