Personnel Management and Regulatory Compliance
Registration lifecycle
Representatives register through Form U4; terminations are reported on Form U5, generally within 30 days of termination. Material changes - address, disciplinary events, outside business activities - must be amended on Form U4 within 30 days of the event. The firm must fingerprint covered persons and screen for statutory disqualification; a disqualified person cannot be registered without relief.
Ongoing obligations
- Continuing education: 12 credits every three years - 6 in the regulatory element and 6 in the firm element.
- Annual compliance meeting: every registered representative attends annually, and attendance is documented.
- Outside business activities (Rule 3270): written notice to the firm before participating.
- Private securities transactions (Rule 3280): prior written notice; the firm decides whether to record the transaction as selling away on its books.
- Gifts (Rule 3220): no more than $100 per year per recipient; non-cash compensation rules further restrict fund and insurer incentives.
- AML (Rule 3310): written program, designated AML compliance officer, ongoing training, and independent testing each year.
Traps
- Treating the U4 as a one-time filing - amendments are heavily tested.
- Assuming an outside business activity needs approval; Rule 3270 requires written notice (the firm may then prohibit it).
- Confusing the 30-day U4 amendment window with the 30-day U5 filing window after termination.
- Overlooked political contributions and outside positions can trigger pay-to-play or disclosure problems.
Worked example. A registered representative starts a weekend tax-preparation business. She must give written notice to the firm before starting; the firm may approve, restrict or prohibit it, and if permitted it is disclosed on Form U4. Failing to notify is a Rule 3270 violation even though the business has nothing to do with securities.