FINRA Rule 1010

The Central Registration Depository — The System Rule 1010 Governs

The Central Registration Depository — universally abbreviated CRD — is the electronic registration and licensing system operated by FINRA that serves as the central repository for registration information about every broker-dealer firm and every registered representative in the United States securities industry.

The CRD system was originally developed jointly by FINRA — then operating as the National Association of Securities Dealers — and state securities regulators through the North American Securities Administrators Association, creating a single centralised database that satisfies both federal and state registration requirements simultaneously.

When a broker-dealer member firm submits a Form U4 registering an associated person through the CRD system, the filing simultaneously satisfies the FINRA registration requirement and the state registration requirements of each jurisdiction where the individual will conduct securities business — eliminating the need for separate filings with each regulatory authority.

The CRD system maintains the complete registration history of every registered individual — all examinations passed, all firms with which the individual has been registered, all states and jurisdictions where registration has been held, all regulatory disclosures including customer complaints, arbitration awards, criminal matters, regulatory actions, and financial events — creating a permanent comprehensive record that follows the individual throughout their career in the securities industry regardless of how many times they change firms or jurisdictions.

Form U4 — The Uniform Application for Securities Industry Registration

The Form U4 — Uniform Application for Securities Industry Registration or Transfer — is the primary registration document that FINRA member firms submit through the CRD system to register an associated person with FINRA and applicable state securities regulators, and to update that person’s registration information as their circumstances change throughout their career.

An initial Form U4 must be filed when an individual first becomes associated with a FINRA member firm and seeks registration as a registered representative — disclosing the individual’s complete employment history for the preceding ten years, residential history for the preceding five years, examination history, all required disclosures about criminal matters, regulatory actions, civil judicial actions, customer complaints, arbitration proceedings, financial events including bankruptcies and judgments, and any other information required by the form’s disclosure questions.

The disclosure questions of Form U4 — Section 14 — are among the most consequential elements of the registration process because they require disclosure of events that may affect an individual’s fitness for registration.

Affirmative responses to disclosure questions require the filing of a Disclosure Reporting Page providing full details of the disclosed matter — and the information disclosed becomes part of the individual’s permanent CRD record, accessible through BrokerCheck by investors, employers, and regulators.

Rule 1010 requires that every initial and transfer Form U4 filing be based on a signed copy of the form provided by the individual on whose behalf it is filed — either a manually signed copy or, following the February 2021 amendment to Rule 1010, an electronically signed one, the amendment prescribing no particular technology for obtaining a valid electronic signature.

The member firm must retain the signed Form U4 in accordance with the record retention requirements of SEC Exchange Act Rule 17a-4 — making the signed form available promptly upon regulatory request.

Registered individuals are under a continuing obligation to update their Form U4 within specified timeframes when their circumstances change — including changes in employment, residential address, disclosure events, and other information required by the form.

Under Article V, Section 2(c) of the FINRA By-Laws an amendment must be filed not later than thirty days after learning of the facts or circumstances giving rise to it. An amendment involving a statutory disqualification must be filed not later than ten days after the disqualification occurs.

Signed Copies, Typed Names and Valid Electronic Signatures

The signed Form U4 that Rule 1010 requires is not itself filed with FINRA.

The member firm — or the applicant for membership — files the electronic Form U4 through the CRD system and keeps the signed copy, together with any written acknowledgment of amended disclosure information, for authentication and evidentiary purposes, retaining it in accordance with the SEC’s recordkeeping rules and making it available promptly upon regulatory request.

The signed copy is therefore the firm’s evidence that the individual stands behind what was filed, while the electronic filing is the record that regulators and BrokerCheck draw upon.

Because the signed copy stays with the firm, the electronic filing carries no handwritten or electronic signature of its own.

For the purposes of the CRD Form U4 filing, the member types the individual’s name in the CRD Form U4 signature field to indicate that the individual has signed the form or acknowledged the information in it — a typed entry that represents a signature the firm must be able to produce on request, not a substitute for obtaining one.

The February 2021 amendment that allowed a Form U4 to be based on an electronically signed copy deliberately left the choice of technology to the firm.

As FINRA described the change in its filing with the SEC, a valid electronic signature is any electronic mark that clearly identifies the signatory and is otherwise in compliance with the Electronic Signatures in Global and National Commerce Act, the SEC’s guidance relating to that Act, and the guidance FINRA staff have provided through interpretive letters.

A firm that relies on an electronically signed copy retains it in the same way as a manually signed one, so the change altered how the individual may sign without altering what the firm must keep.

Amending Disclosure Information Without a New Signature

Rule 1010(c)(2) gives a member a second route for an amendment to the disclosure information on Form U4.

Instead of obtaining the associated person’s signature on the amended form, the member may file the amendment electronically provided it uses reasonable efforts to provide the associated person with a copy of the amended disclosure information before filing, and to obtain, before filing, the associated person’s written acknowledgment — which may be electronic — that the information has been received and reviewed.

The member retains that acknowledgment as part of its recordkeeping and makes it available promptly upon regulatory request.

The acknowledgment route is confined to amendments.

Every initial and every transfer Form U4 filing must still be based on a signed copy of the form, so a member cannot begin a registration, or move one from another firm, on the strength of a written acknowledgment — the alternative exists only to keep the disclosure information on an existing registration current.

Neither route can hold a disclosure amendment back.

Where the member cannot obtain the signature or the written acknowledgment before filing, Rule 1010(c)(3) obliges it to file the disclosure information as to which it has knowledge in accordance with Article V, Section 2 of the FINRA By-Laws, and the obligation does not end with the filing: the member must then use reasonable efforts to provide the associated person with a copy of the amended disclosure information that was filed.

Supplementary Material .03 gives as examples a person who refuses to acknowledge the information, one on active military service, and one otherwise unavailable during the period provided for filing.

Administrative Data — Amendments That Need No Signature

Rule 1010(c)(4) separates the administrative data on Form U4 from its disclosure information.

A member may file electronically amendments to administrative data without obtaining the associated person’s signature on the form, and the rule asks for no written acknowledgment before filing either.

The member’s only obligation toward the individual is to use reasonable efforts to provide the associated person with a copy of the amended administrative information that was filed — a copy that follows the filing rather than preceding it.

Supplementary Material .04 says what administrative data includes: such items as the addition of state or self-regulatory organisation registrations, exam scheduling, and updates to residential, business and personal history.

A member that adds a state registration for a representative who is to begin doing business with customers in a new state, or that records the representative’s move to a new home address, therefore files an administrative amendment and may do so without the representative’s signature.

A new customer complaint, regulatory action, criminal matter or financial event is a different kind of change.

It goes to the disclosure questions of Form U4, and an amendment reporting it is governed by the signature, acknowledgment and reasonable-efforts requirements of paragraphs (c)(1) to (c)(3) rather than by paragraph (c)(4).

The classification of an amendment as administrative or as disclosure therefore decides which procedure the member follows before it files — not whether the amendment has to be filed at all, since every application for registration must be kept current by supplementary amendments whichever kind of information has changed.

Fingerprint Requirements

Rule 1010 requires a member, upon filing an electronic Form U4 on behalf of a person applying for registration, promptly to submit fingerprint information for that person — although FINRA may make a registration effective pending receipt of the fingerprint information.

The fingerprint submission must be made within thirty days of FINRA’s receipt of the electronic Form U4.

If a member firm fails to submit the required fingerprint information within thirty days after FINRA receives the Form U4, the person’s registration is deemed inactive — and the individual must immediately cease all activities requiring registration and is prohibited from performing any duties or functioning in any capacity that requires registration.

FINRA will administratively terminate a registration that remains inactive for a period of two years.

A person whose registration is administratively terminated may reactivate it only by reapplying and meeting all qualification requirements applicable to a new registration.

Who Must Be Fingerprinted — SEC Rule 17f-2 and Its Exemptions

The fingerprint information Rule 1010 calls for serves a federal requirement: under Section 17(f)(2) of the Securities Exchange Act of 1934, SEC Rule 17f-2 requires every broker-dealer, except as the rule otherwise provides, to have its partners, directors, officers and employees fingerprinted and the fingerprints submitted to the Attorney General of the United States or its designee.

Rule 17f-2(a)(1)(i) exempts a partner, director, officer or employee of a broker-dealer only if the person meets all three of its conditions: the person is not engaged in the sale of securities; does not regularly have access to the keeping, handling or processing of securities, monies, or the original books and records relating to them; and does not have direct supervisory responsibility over persons engaged in those activities.

An operations employee who never sells but regularly processes customer securities is therefore not exempt, nor is a manager who directly supervises such people.

Rule 17f-2(a)(1)(iii) goes further for a broker-dealer engaged exclusively in the sale of shares of registered open-end investment companies, variable contracts, or interests in limited partnerships, unit investment trusts or real estate investment trusts that ordinarily are not evidenced by certificates: it exempts every person who does not regularly have access to securities, monies or the original records, even one who sells.

The firm must be current in updating Item 10 of Form BD for statutory disqualifications, must carry insurance or bonding indemnifying it for customer losses caused by the fraudulent or criminal acts of the exempted persons, and must be subject to a state insurance department’s jurisdiction over its variable contract sales.

These exemptions are claimed by the firm rather than granted on application, unlike the further exemptions the SEC may grant to a class of persons under Rule 17f-2(a)(2).

A firm claiming one must make and keep current a statement entitled Notice Pursuant to Rule 17f-2 identifying the persons claimed to be exempt by division, department, class, title or position, and the persons it identifies are exempt unless the SEC notifies the firm to the contrary.

Meeting the Fingerprint Requirement — Self-Regulatory Plans, Other Law and Illegible Cards

A broker-dealer need not deal with the Attorney General directly.

Rule 17f-2(c) provides that the fingerprinting requirement of Section 17(f)(2) may be satisfied by submitting appropriate and complete fingerprint cards to a registered national securities exchange or a registered national securities association which, under a plan filed with and declared effective by the SEC, forwards the cards to the Attorney General or its designee for identification and processing.

A plan of this kind does not become effective unless the SEC declares it not inconsistent with the public interest or the protection of investors.

Fingerprinting already done under another law can also count.

Under Rule 17f-2(b) the requirement is satisfied for a partner, director, officer or employee who, in connection with his or her present employment with the firm, has been fingerprinted under any other federal or state law, statute, rule or regulation — provided the fingerprint cards were submitted to the Attorney General or its designee and actually processed, and the processed cards or substitute records are maintained as the rule requires.

A set of fingerprints taken in connection with employment by an earlier employer does not meet the condition.

The rule also deals with the person whose prints cannot be read.

Rule 17f-2(a)(1)(iv) exempts a partner, director, officer or employee where the firm, on at least three occasions, has attempted in good faith to obtain a complete set of fingerprints acceptable to the Attorney General — having the person fingerprinted by someone competent to roll them and submitting the cards in accordance with proper procedures — and has had the cards returned without identification because the fingerprints were illegible, and where the firm retains the returned cards and the related records.

Fingerprint Records, the Employing Office and the Exemption Notice

Rule 17f-2(d) governs what happens to the results.

The processed fingerprint card, or a substitute record where the card is not returned, together with any information received from the Attorney General, is kept in an easily accessible place at the organisation’s principal office.

The principal office must in turn provide to the regional, branch or satellite office actually employing the person written evidence that the person’s fingerprints have been processed by the FBI, and a copy of any criminal history record information received from the FBI — so the office that supervises the individual day to day sees the result of the check.

Those records need not sit with the broker-dealer at all.

Rule 17f-2(d)(2) allows them to be maintained and preserved on the firm’s behalf by a self-regulatory organisation that is also the firm’s designated examining authority, provided that organisation has filed a fingerprinting plan covering the storage and maintenance of records which the SEC has declared effective, the records remain subject to SEC examination, and the organisation furnishes complete, correct and current hard copies to the SEC on demand.

The exemption notice carries record rules of its own.

Besides identifying the exempt persons, the Notice Pursuant to Rule 17f-2 describes in generic terms the nature of their duties and the security measures used to ensure that only fingerprinted or exempt persons have access to the keeping, handling or processing of securities, monies and the related original records.

A copy is kept in an easily accessible place at the principal office and at the office employing the persons for whom the exemptions are claimed, and SEC Rule 17a-4(e)(3) requires the notice, as a record under Rule 17a-3(a)(15), to be preserved during the life of the enterprise — not for a fixed term running from the departure of any one person.

Form U5 — The Uniform Termination Notice for Securities Industry Registration

The Form U5 — Uniform Termination Notice for Securities Industry Registration — is the form that FINRA member firms submit through the CRD system when an associated person’s registration with the firm is terminated — whether through resignation, termination, retirement, or any other form of departure from the firm.

Article V, Section 3 of the FINRA By-Laws requires member firms to give notice of the termination on Form U5 not later than thirty days after the termination of a registered person’s association with the firm, and Rule 1010 requires that notice to be filed electronically.

The firm must concurrently provide a copy of the filed Form U5 to the terminated individual — giving them notice of the information reported about their departure.

The Form U5 requires disclosure of the reason for termination — including whether the departure was voluntary, permitted to resign, discharged, or other — and requires disclosure of any matters arising in connection with or after the termination that would require disclosure if reported on a Form U4.

Specifically the firm must disclose whether the individual was under internal review for fraud, wrongful taking of property, or violations of investment-related statutes or regulations at the time of departure — a requirement designed to prevent member firms from allowing problem employees to quietly resign without regulatory disclosure of the underlying concerns.

The information disclosed on Form U5 becomes part of the individual’s permanent CRD record and is accessible through BrokerCheck — making the accuracy and completeness of Form U5 disclosures critically important both for investor protection and for the individual’s future employment prospects in the securities industry.

Keeping the Signed Forms — Retention Under Rule 1010

Rule 1010(c)(1) ties the retention of a signed Form U4, and of any signed amendment to its disclosure information, to SEC Exchange Act Rule 17a-4(e)(1).

That rule requires the records SEC Rule 17a-3(a)(12) calls for — the employment record a broker-dealer keeps for each associated person — to be maintained and preserved in an easily accessible place until at least three years after the associated person’s employment and any other connection with the firm has terminated.

The retention period therefore runs from the end of the person’s association, however long that association lasts, and a Form U4 signed when a representative joined a firm thirty years earlier is still held until three years after the representative’s last connection with it ends.

Form U5 records follow a different clock.

Rule 1010(e) requires the member, as part of its recordkeeping requirements, to retain its Form U5 records for a period of not less than three years, the first two years in an easily accessible place, in accordance with SEC Rule 17a-4, and to make those records available promptly upon regulatory request.

After the second year the records must still be preserved for the rest of the three-year period, but need no longer be kept in an easily accessible place.

The retention duty also reaches a firm that is not yet a member.

Rule 1010(c)(1) requires an applicant for membership to retain, in accordance with SEC Rule 17a-4(e)(1), every signed Form U4 it receives during the application process and to make them available promptly upon regulatory request — so the signed forms an applicant gathers from the people it intends to register are records of the applicant from the moment it receives them, before any decision on its membership has been made.

The Associated Person Record Under SEC Rule 17a-3(a)(12)

The signed Form U4 also does work under the SEC’s own books-and-records rule.

SEC Rule 17a-3(a)(12)(i) requires every broker-dealer to make and keep a questionnaire or application for employment executed by each associated person, and the questionnaire must be approved in writing by an authorized representative of the broker-dealer — so the record documents the firm’s own review of the individual as well as the individual’s answers.

The questionnaire must contain at least the person’s name, address, social security number, date of birth and starting date of association; a complete, consecutive statement of the person’s business connections; records of any denial of membership or registration, disciplinary action or sanction, and of any injunction against the person or a firm with which the person was associated; any other names the person has used; and a record of any arrest or indictment for any felony, or for a misdemeanour pertaining to securities, commodities, banking, insurance or real estate, fraud, false statements or omissions, wrongful taking of property, bribery, forgery, counterfeiting or extortion, together with the disposition of each.

The criminal record therefore begins at arrest or indictment rather than waiting for a conviction.

The rule then provides a shortcut for registered people.

Where the associated person has been registered as a registered representative of the firm with a registered national securities association or a registered national securities exchange, or the person’s employment has been approved by one, retention of a full, correct and complete copy of any and all applications for that registration or approval is deemed to satisfy the questionnaire requirement of paragraph (a)(12)(i).

The signed Form U4 a member keeps under Rule 1010 therefore also serves as its SEC employment questionnaire for a registered representative.

The Office Listing of Associated Persons

SEC Rule 17a-3(a)(12)(ii) adds a second, firm-wide record alongside the individual questionnaire.

Every broker-dealer must keep a record listing every associated person which shows, for each person, every office of the firm where the person regularly conducts the business of handling funds or securities, effecting transactions in securities, or inducing or attempting to induce the purchase or sale of any security for the firm, together with the person’s Central Registration Depository number, if any, and every internal identification number or code the firm has assigned to that person.

The listing records something the questionnaire does not.

The questionnaire describes who the person is and what is in his or her background; the office listing records the offices of the firm where the person regularly conducts securities business, and the numbers by which the CRD system and the firm itself identify the person.

Like the questionnaire, the office listing is a record required under Rule 17a-3(a)(12), so SEC Rule 17a-4(e)(1) requires it too to be preserved in an easily accessible place until at least three years after the associated person’s employment and any other connection with the firm has terminated.

The registration-application shortcut does not reach this record.

Rule 17a-3(a)(12)(i) provides that retaining a registered person’s application for registration is deemed to satisfy the requirements of paragraph (a)(12)(i) — the questionnaire — and says nothing of paragraph (a)(12)(ii).

A firm that keeps every signed Form U4 must therefore still maintain the office listing, and the listing must include any associated person who has no CRD number, who is then identified by the internal number or code the firm has assigned.

BrokerCheck — The Public Face of the CRD System

BrokerCheck is FINRA’s free online tool that allows members of the public to research the professional background, registration history, examination record, and disciplinary history of any registered representative or broker-dealer that is or was registered through the CRD system, within the limits FINRA Rule 8312 sets for persons who left the industry more than ten years ago — translating the regulatory data collected through Rule 1010 filings into a publicly accessible investor protection resource.

Through BrokerCheck any investor can access comprehensive information about any registered individual including current and previous registrations, qualification examinations passed and the dates passed, employment history, regulatory actions, customer complaint disclosures and arbitration awards, and the other information reported on the most recently filed Forms U4 and U5, subject to the exclusions FINRA Rule 8312 sets out.

FINRA Rule 2267 requires member firms, once every calendar year, to provide each customer in writing with the FINRA BrokerCheck Hotline Number, the FINRA website address and a statement as to the availability of an investor brochure that includes information describing BrokerCheck — connecting the administrative filing requirements of Rule 1010 directly to the investor protection mission of public transparency about registered professionals.

The Securities Exchange Act of 1934 — the foundational statute under which FINRA operates as a self-regulatory organisation — requires, in Section 15A(i), a registered securities association to maintain a toll-free telephone listing and a readily accessible electronic or other process to receive and promptly respond to inquiries regarding registration information on its members and their associated persons.

BrokerCheck is the primary mechanism through which that information is made available — and Rule 1010 is the mechanism through which the information is collected and maintained.

Supervisory Responsibilities Under Rule 1010

Rule 1010 imposes specific supervisory responsibilities on member firms in connection with their registration filing obligations — requiring each firm to identify a registered principal or corporate officer who has a position of authority over registration functions and who is responsible for supervising the electronic filing of appropriate forms.

Rule 1010 imposes this designation requirement in order to comply with the supervisory procedures requirement in FINRA Rule 3110 — which requires member firms to establish and maintain a written supervisory system designed to achieve compliance with applicable rules.

The supervision of registration filing accuracy and timeliness is a component of that broader supervisory obligation — and FINRA’s Sanction Guidelines carry a guideline of their own for late filing of Forms U4 and U5 or their amendments, failing to file them, and filing false, misleading or inaccurate forms or amendments.

Delegating Electronic Filing — What the Designated Principal Keeps

Supplementary Material .01 to Rule 1010 allows the registered principal or corporate officer designated under paragraph (b)(1) to delegate the electronic filing of the member’s appropriate forms via Web CRD to an associated person — and the person to whom the filing is delegated need not be registered.

The individual who keys a Form U4, a Form U5 or an amendment into the CRD system may therefore be a member of the firm’s operations or registration staff who holds no registration of any kind.

The designated principal or officer may also delegate to the associated person making the electronic filings the paragraph (b)(2) requirement to acknowledge, electronically, that the filing is being made on behalf of the member and the member’s associated persons.

The acknowledgment that accompanies each filing may therefore come from the delegate who submits it rather than from the principal or officer who supervises the process.

What the designated principal or officer may not delegate is any of the supervision, review and approval responsibilities that paragraphs (b)(1) and (b)(2) assign.

Those remain with the designated person, who must take reasonable and appropriate action to ensure that all delegated electronic filing functions are properly executed and supervised.

Supplementary Material .02 adds that a member may enter into an agreement with a third party under which the third party files the required forms electronically on behalf of the member and its associated persons, and that notwithstanding such an agreement the member remains responsible for complying with the requirements of Rule 1010.

Membership and Branch Office Filings Through the CRD System

Rule 1010 reaches the filings a firm makes about itself as well as those it makes about individuals.

Article IV, Section 1 of the FINRA By-Laws requires each applicant and each member to ensure that its membership application with FINRA is kept current at all times by supplementary amendments via electronic process, or such other process as FINRA may prescribe, filed not later than thirty days after learning of the facts or circumstances giving rise to the amendment.

The duty to keep the application current therefore applies while an application is still pending, not only after a firm has been admitted.

Article IV, Section 8 requires each branch office of a member to be registered with and listed upon the membership roll of FINRA, and to pay the dues, assessments and other charges the Board fixes for it.

It also requires each member to advise FINRA via electronic process of the opening, closing, relocation, change in designated supervisor, or change in designated activities of any branch office — so a new supervisor taking charge of an existing branch is itself a reportable change, even though the office has neither opened, closed nor moved.

The branch office notice runs on its own clock.

The member must advise FINRA not later than thirty days after the effective date of the change, whereas the membership application and Form U4 amendment periods run from when the firm learns of the facts giving rise to the amendment.

A branch relocation that took effect on the first of the month is therefore due thirty days later however late the firm’s compliance department hears of it.

Examination Relevance and Key Takeaways

FINRA Rule 1010 is tested on the Series 7 and Series 65 examinations in the context of broker-dealer registration requirements, the CRD system, BrokerCheck, and the Form U4 and Form U5 filing obligations applicable to member firms and registered representatives.

The key points to retain are these.

Except as provided in Rule 1013(a)(2), FINRA Rule 1010 requires the registration-related forms the FINRA By-Laws call for — including Form U4, Form U5, and Form BD — to be filed electronically through the Central Registration Depository operated by FINRA.

The CRD system serves as the centralised registration database for all broker-dealer firms and registered representatives in the United States — satisfying both FINRA and state registration requirements through a single filing.

Form U4 is the Uniform Application for Securities Industry Registration filed when an individual becomes registered with a FINRA member firm — requiring comprehensive disclosure of employment history, residential history, examination record, and all required disclosure events including criminal matters, regulatory actions, customer complaints, and financial events.

Registered individuals have a continuing obligation to update their Form U4 within specified timeframes — generally not later than thirty days after learning of the facts giving rise to an amendment, and ten days after a statutory disqualification occurs.

Fingerprint information not received within thirty days after FINRA receives the electronic Form U4 leaves the registration deemed inactive.

Form U5 is the Uniform Termination Notice filed within thirty days of an associated person’s departure from a member firm — requiring disclosure of the reason for termination and any matters arising in connection with the departure that would require disclosure on Form U4.

The information from Form U4 and Form U5 filings is publicly accessible through BrokerCheck — FINRA’s investor protection tool allowing any member of the public to research the background and disciplinary history of any registered representative or broker-dealer.