The SEC recently upheld a statutory disqualification that FINRA imposed where the representative filed a false U-4 and falsely answered compliance questionnaires. It appears as though the registered representative failed to disclose tax liens and a bankruptcy on his U-4. So is statutory disqualification the proper punishment for this misdeed.

According to FINRA and the SEC, the answer is a resounding yes and, unfortunately for the registered representative, this makes sense. After all, the U-4 is the lynchpin of what must be disclosed to FINRA and members firms. The answers serve as the basis for whether a registered representative will be hired, retained and supervised.

Similarly, firms use compliance questionnaires to determine if there are compliance issues that need to be addressed. The firm cannot satisfy that purpose when the responses are a lie.

The moral of the story, do not lie on your U-4 and compliance questionnaires. It is only a matter of time before you are caught, and you will be caught. Why throw away your career when the true answers may not have had any impact on the person’s career or position with the member firm.

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