The end of the year is an excellent time to remind investment advisor representatives (IARs) of the duty to update their Form U4. In addition, investment advisor firms should be, at least annually, reminding IARs of their ongoing duty to update the U4. According to the U4 instructions, “an individual is under a continuing obligation to amend and update information required by Form U4 as changes occur.” A state regulator can take action against an individual for improperly reporting any information on the form. This is especially true for an individual’s employment background and disciplinary actions.
Category Archives: Form U4
The establishment of sound policies and procedures aimed at monitoring the outside activities of its supervised persons (i.e. the advisor’s officers, directors, partners, investment advisor representatives, and employees) should be part of any firm’s written compliance programs. It is suggested that some type of “outside business activities form” be created and all supervised persons be required to complete the form on an annual basis and whenever changes are needed. Besides the human resources reasons for monitoring outside business activities, there are two important regulatory reasons: (a) Form ADV disclosure purposes, and (b) Form U4 disclosure purposes.
California Requires Paper U4 for Officers of State Registered Firms not also licensed as Advisor Representatives
September 28, 2006
The California Department of Corporations requires a Form U4 for each officer, director, partner and each person who owns 10% or more of an investment advisor firm registered directly with the State of California. Typically, state regulators require a Form U4 for only those individuals that serve as an investment advisor representative of the firm. California is taking an additional step and requiring a Paper Form U4 for Executive Officers and Owners of advisor firms, as reported on Form ADV Schedule A or B, that do not act as investment advisor representatives. If an individual’s Form U4 is on file with the Web CRD system, a paper Form U4 is not required.
