Initiate investigations of registered individuals promptly. As a result, FINRA-regulated employers should consider doing a number of things. FINRA reviews the information disclosed on the Form U4 to determine whether an applicant is subject to a “statutory disqualification” or whether the applicant otherwise presents a regulatory risk for the member firm and its customers.2  Firms also use that same information to determine whether an applicant is a candidate for special supervision and to check the backgrounds of individuals they are considering sponsoring for registration. According to FINRA, these searches will “better position FINRA to assess firm and registered individual compliance with reporting requirements.”, Recommendations for FINRA-Regulated Employers. Therefore, I want to ask for everyone's advice here. Guaranteed. ESR Offers Background Checks for the Financial Industry. Neither the amendment nor FINRA place any limits on the scope of such an investigation. Any records we may uncover during our research are directly verified at the source to ensure accuracy and completeness, so you will never be left wondering about the specific details of a public record filing. However, the amendment to Rule 3110(e), which applies to new or transfer registration applicants, contains two separate components: an obligation to investigate the good character, business reputation, qualifications and experience of applicants and to verify information contained on the applicant’s U4. Of course, firms may find it necessary to conduct a more in-depth search on a particular applicant depending on the applicant’s job function, responsibilities, or position at the firm. 2  Section 3(a)(39) of the Securities Exchange Act sets out the reasons for which an applicant may be subject to a “statutory disqualification.”. In other words, member firms are required to run thorough background checks on all sponsored applicants for registration. The amendment states that the “procedure shall, at a minimum, provide for a search of reasonably available public records to be conducted by the member, or a third-party service provider.”  FINRA recommends that these procedures set out the process the member firm will follow for completing the necessary public record search and also state that those checks will include, at a minimum, a national search of available filings. Beginning July 1, 2015, FINRA’s new background check requirements for registration applicants went into effect. For most applicants, FINRA expects firms will conduct the investigation and verification process concurrently using some of the same information and prior to filing the Form U4. This package is focused solely on satisfying the national public record requirement of FINRA’s Form U4 verification rule. Find the answer to this and other questions in our FAQ’s. Last year, the Financial Industry Regulatory Authority (FINRA), a non-governmental organization that regulates member brokerage firms and exchange markets, approved proposed Rule 3110(e), which enhances the background screening requirements already in place for FINRA-member institutions and registered individuals. Among the new guidelines, registered firms now have to include, at minimum, a national public record search to complete the verification of information provided on Form U4 applications. All Rights Reserved. All levels of research include a detailed report outlining the checks performed and the corresponding findings, and any potentially negative public records discovered will contain a full verified description of the record and its current status. The Bronze Package includes the following nationwide state and federal record searches: This package is focused on satisfying the public record check requirement of FINRA’s verification rule and provides additional research to assist with the overall Form U4 verification process. A FINRA background check is a check done by the corporation to ensure the accuracy of an applicants U4 form. Some of the information maintained on the CRD is available to investors through BrokerCheck. FINRA Background Check & Verification Services, Affordable Compliance Solutions for the Financial Services Industry, Ban on Credit Reports Shouldn’t Impact Employee Screening, New FINRA Background Check Requirements: What You Need to Know, Not Home for the Holidays – Making the Best of Spending the Holidays in Long Term Care. Please let me know what you guys think. While all information returned is verified at the source, firms selecting this option will need to perform additional research in-house to satisfy the overall requirements. Each of these statutes specifically exclude individuals with certain types of criminal records from working in certain types of positions and impose steep penalties for non-compliance with the statutory exclusions. Under the old rule, FINRA-regulated firms were required to investigate the good character, business reputation, qualifications and experience of applicants. Although the verification process must be completed no later than 30 calendar days after the Form U4 is filed, FINRA has emphasized that the verification process is not limited to only the 30 days following the filing of a Form U4 and can be done prior to this period:  “The 30-day window is intended to accommodate firms that may find it difficult to conduct the verification process before filing an applicant’s Form U4, such as where an applicant is hired immediately to fill a needed role at the firm.”  FINRA also notes that the investigation and verification requirements are complimentary but not identical.

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