FINRA Background Check Requirement Starts in July
The SEC approved FINRA’s new rule requiring member firms to conduct a public records search to verify the accuracy and completeness of information on a Rep’s Form U4. The public records search must be satisfied “no later than 30 calendar days after the initial or transfer U4 is filed.” The public records search includes verifying name and address; searching criminal, bankruptcy, and litigation records; investigating liens; and reviewing business records. FINRA only requires “a national search of reasonably available records.” The new requirement becomes effective in July 2015.
OUR TAKE: We suspect that third party firms will make their services available to ensure compliance with the background check requirement. Otherwise, firms will have to hire personnel and assume liability themselves.