Reporting of Disclosure Events Besides complaints, certain other events, findings and
circumstances require prompt reporting to FINRA. To follow is a summary of reportable events, whether involving the Company or an associated person. This list does not contain all the Rule language: it is only a summary. All associated persons MUST inform the
designated Principal of any such event summarized here—when in doubt, persons
should discuss the issue with their supervisors to determine if the circumstance calls for reporting:
• External Findings—Rule Violations: Found to have violated any securities-, insurance-, commodities-, financial- or investment-related laws, rules, regulations or standards of conduct of any domestic or foreign regulatory body, SRO or business or professional organization. This does not include informal agreements, deficiency letters, examination reports, memoranda of understanding, cautionary actions, admonishments and similar informal resolutions of matters; nor does it include SRO ‘minor’ rule violations if there was no fine or the fine was less than or equal to $2500.
• Regulatory Proceedings: Named as a respondent or defendant in any proceeding brought by a domestic or foreign regulatory body or SRO.
• Other Regulatory Actions: Subject to disciplinary or other actions (such as suspensions, disbarment, cease and desist orders, etc.) by any securities, insurance or commodity industry domestic or foreign regulatory body or SRO.
• Criminal Actions Involving Felonies & Certain Misdemeanors: The subject of any indictment, conviction, or guilty or no contest plea involving: any felony or certain misdemeanors, such as a misdemeanor involving the purchase or sale of a security or involving forgery; a conspiracy to commit any of these offenses; or substantially equivalent actions.
• Associations with Certain Entities: Associated with certain financial entities that were denied registration, suspended, expelled or had their registration revoked by a regulator or associated with a financial institution that was convicted of, or pleaded no contest to, any felony or misdemeanor. This includes associations as director, controlling stockholder, partner, officer or sole proprietor of, or an associated person with, a broker, dealer, investment company, investment advisor, underwriter or insurance company, and includes foreign matters.
• Civil Litigations, Arbitrations, Claims for Damages: Named as a defendant or respondent in any securities or commodities-related civil litigation or arbitration or any financial-related insurance civil litigation or arbitration, or is the subject of any claim for damages by a customer, broker or dealer that relates to the provision of financial services or relates to a financial transaction, that was disposed of by judgment, award or settlement in excess of $15,000 ($25,000 in the case of the Company as a member firm). Note that legal fees and interest are included in the totals.
• Statutory Disqualifications: Subject to a statutory disqualification or involved in the sale of any financial instrument, the provision of any investment advice or the financing of any such activities with any person who is subject to a statutory disqualification. • Internal Disciplinary Actions: In the case of associated persons only, the subject of any
disciplinary action taken by the Company involving suspension, termination or the withholding of compensation/imposition of fines in excess of $2,500. Also applies to discipline that significantly limits the person’s activities, whether temporarily or permanently.
• Internal Conclusions of Violations: Conclusions reached about violative conduct by associated person or the Company. See below for details.
All of the above events (except findings and actions by FINRA) must be reported to FINRA on the online “Rule 4530 Application” section of the Regulatory Filings Application system and respective uniform forms, depending on the circumstance (for instance, on Form BD for the Company, and Forms U4 and U5 for individuals). However, events already reported on Form U4 with an affirmative request to satisfy Rule 4530 reporting requirements do not require separate reporting. The Licensing and Registration Principal must ensure that required filings are made within 30 days of the Company learning of these reportable events, and that all forms are reviewed and signed by the appropriate signatories as
described elsewhere in this Manual. The designated Principal will ensure proper recordkeeping of all such filings and related documentation.
Note on former associated persons: Reporting must be made for conduct (i.e., not just the event, but the conduct that led to the event) that occurred while a former associated person was registered with the Company. If reportable conduct is disclosed on Form U5 filings (on Questions 13, 14 and 15) because the person was associated within the prior two years, it need not be reported via the 4530 Application system. However, if the conduct is reportable under Rule 4530 but not reportable on Form U5 due to it being outside the U5 date range, the Company must report it on the Rule 4530 Application.
Documentation to FINRA In certain cases, the Company will be required to provide
copies of the following to FINRA:
• any indictment, information or other criminal complaint or plea agreement for conduct reportable under “Criminal Actions Involving Felonies & Certain Misdemeanors” bullet point, above;
• any complaint in which the Company is named as a defendant or respondent in any securities- or commodities-related litigationor in any financial-related insurance private civil litigation;
• any securities or commodities-related arbitration claim, or financial-related insurance arbitration claim, filed against the Company in any forum other than FINRA’s Dispute Resolution forum; and
• any indictment, information or other criminal complaint, any plea agreement, or any private civil complaint or arbitration claim against an associated person of the Company that is reportable under question 14 on Form U4, irrespective of any dollar thresholds Form U4 imposes for notification, unless, in the case of an arbitration claim, the claim has been filed in FINRA’s Dispute Resolution forum.
The designated Principal must ensure timely filings of these documents, when applicable, and must provide copies of related documents to the District Office or other FINRA office, when requested. Copies of all documents pertaining to the events will be maintained in dedicated files. The Company, if subject to a request by FINRA's Registration and Disclosure staff, will provide requested documents to the Registration and Disclosure staff not later than 30 days after receipt of such request, or sooner if so requested. Filings must be made in a manner and format specified by FINRA, such as electronically via Firm Gateway.
Additional Reporting Each associated person must also immediately inform the designated
Principal if:
• he or she is the subject of any regulatory investigation that could result in reportable events: notices of such investigations are typically referred to as “Wells Notices”;
• he or she is the subject of any pending investment-related civil action; • allegations of sales practice violations are made against the associated
person in a civil lawsuit or arbitration in which the person is NOT named, but can be reasonably identified as involved in the alleged violation.
The designated Principal will review the events to determine reporting requirements and will ensure that proper and timely reporting is made via U4 or U5 filings.