1.2 Individual Registration: Forms U4 and U5, Registration Categories, and Exempt Persons

Form U4: The Individual Registration Record

Form U4 (Uniform Application for Securities Industry Registration or Transfer) registers an individual with FINRA, other SROs and the states, and becomes the person's permanent CRD record. The hiring firm files it electronically under Rule 1010 after completing the background investigation covered in Section 1.3. Key content includes:

• Residential history for the past five years and employment history for the past ten years, accounting for all time.
• Disclosure questions (Question 14) covering criminal charges and convictions, regulatory and civil actions, customer complaints and arbitrations, terminations, and financial events such as bankruptcies or compromises with creditors within the past ten years and unsatisfied judgments or liens of any amount.
• Customer-complaint reporting thresholds. A written sales practice complaint is reportable if it alleges compensatory damages of $5,000 or more. A settled complaint, arbitration or civil action is reportable if it settled for $15,000 or more.

Amendment deadlines. FINRA By-Laws Article V, Section 2(c) requires U4 amendments not later than 30 days after the firm learns of the facts, and not later than 10 days after a statutory disqualification occurs. Late disclosure filings incur CRD late fees, and willful omissions can themselves create a statutory disqualification.

Arbitration disclosure (Rule 2263). Form U4 contains a predispute arbitration clause covering employment disputes. Rule 2263 requires the firm to give the applicant FINRA's prescribed written disclosure statement about that clause when asking the person to sign or acknowledge the form. Statutory employment discrimination claims, including sexual harassment claims, are not required to be arbitrated under FINRA's Industry Code unless the parties agree.

Form U5: Termination

When an individual's association ends, By-Laws Article V, Section 3 requires the firm to file Form U5 within 30 days after termination and give the individual a copy at the same time. If the firm later learns facts that make the U5 inaccurate or incomplete, it must file an amended U5 within 30 days after learning of them and again provide a copy. FINRA reminds firms that a U5 reporting an internal review must later be amended to report its conclusion and findings.

• A full U5 ends every registration the person holds through the firm and requires the reason for termination and the disclosure questions.
• A partial U5 ends only selected registrations or jurisdictions.
• Termination reasons are Discharged, Permitted to Resign, Voluntary, Deceased and Other. The first two and "Other" require an explanation, which must be accurate and not misleading.

Terminated individuals must report residential address changes to FINRA for two years, because they remain subject to FINRA jurisdiction for that period (Section 3.3).

The Series 26 Registration Category

FINRA Rule 1220(a)(11) creates the Investment Company and Variable Contracts Products Principal category for principals whose activities are limited to the products a Series 6 representative may sell under Rule 1220(b)(7). Before or at registration, the person must be registered as a General Securities Representative (SIE + Series 7) or an Investment Company and Variable Contracts Products Representative (SIE + Series 6) and pass the Series 26. FINRA's permitted-activities guidance lists the covered products as mutual funds, closed-end funds during the initial offering only, variable annuities and variable life insurance, together with overall supervision of the firm's business in those areas.

A Series 26 principal does not qualify to supervise individual equities, corporate or municipal bonds, options or secondary-market closed-end fund trades. Municipal fund securities such as 529 plans fall under MSRB Rule G-3. Supervising them requires the MSRB's Municipal Fund Securities Limited Principal (Series 51) or Municipal Securities Principal (Series 53) qualification, even though a Series 6 representative may sell them.

Persons Exempt from Registration (Rule 1230)

Only these associated persons are exempt:

• people whose functions are solely and exclusively clerical or ministerial; and
• people whose functions relate solely to exchange-floor transactions (when registered with the exchange), municipal securities, commodities, or security futures (when registered with a futures association).

Rule 1230.01 states that accepting customer orders is not clerical or ministerial. An unregistered assistant may occasionally transcribe order details when no registered person is available, but only if a registered person contacts the customer to confirm the details before the order is entered.

Lapse of Qualification and BrokerCheck

Under Rule 1210.08, a person whose representative or principal registration has been terminated for two years or more must requalify by examination. The exceptions are maintaining the qualification through the Maintaining Qualifications Program (MQP) under Rule 1240(c), described in Section 2.1, or another FINRA-permitted route. The SIE remains valid for four years. Rule 1210.10 tolls these periods during qualifying active military service.

Rule 8312 governs BrokerCheck, which publishes current and former registered persons' CRD information, including disclosure events, to the public. Section 4.2 explains that member websites must link to BrokerCheck.

Registration Lifecycle at a Glance