SEC Upholds FINRA Bar Based on Untruthful Form U4
The SEC has upheld a statutory disqualification imposed by FINRA for failing to file a truthful U4 and lying on compliance questionnaires. FINRA barred the appellant from the securities industry because his Form U4 failed to disclose federal tax liens and a bankruptcy and because he provided false responses on his firm’s annual compliance questionnaires. The appellant sought a stay of the disqualification on the grounds that he would get fired from his current job and suffer economic harm. The SEC rejected his argument and denied the appeal because FINRA has an interest in protecting investors, and a stay of the statutory disqualification for material failures on Form U4 “could endanger investors.”
OUR TAKE: FINRA and the SEC take Form U4 (and annual compliance questionnaires) very seriously. The regulators view the disclosure as a lynchpin to protecting investors.