Comparison of Rule 506(d) “Bad Actor” Provisions to FINRA Forms U4 and U5


Rule 506(d) uses significantly different language from FINRA Forms U4 and U5. Below is a correlation of Rule 506(d) disqualifying events to comparable FINRA Forms U4 and U5 disclosure obligations. FINRA Form U5 disclosure obligations are a subset of those for FINRA U4 and, except as noted in the chart below, are not specifically identified below. The following provision of Rule 506(d) does not appear to have a correlative provision in the FINRA Forms:

Rule 506(d)(1)(viii)- if the issuer or another covered person is subject to a U.S. Postal Service false representation order entered within the preceding five years, or to a temporary restraining order or preliminary injunction with respect to conduct alleged to have violated the false representation statute that applies to U.S. mail.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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