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90-32 Revised Forms U-4 and U-5 Go Into Effect

SUGGESTED ROUTING*

Senior Management
Legal & Compliance
Registration
Training

*These are suggested departments only. Others may be appropriate for your firm.

EXECUTIVE SUMMARY

The SEC has approved changes to the Uniform Application for Securities Industry Registration or Transfer, Form U-4, and the Uniform Termination Notice for Securities Industry Registration, Form U-5. The changes to Form U-4 include the addition of nine new categories of registration and the deletion of one category no longer in use, as well as changes to the certification language on page 4 of the form. The changes to Form U-5 include the addition of a Disclosure Reporting Page (DRP-5) to streamline the submission of disciplinary information relating to Items 13-15 on the form.

BACKGROUND

The NASD, New York Stock Exchange (NYSE), and North American Securities Administrators Association periodically review the registration and termination forms with an eye toward streamlining the registration process or addressing areas that may have caused concerns for regulators and/or members and their associated persons. As a result of the most recent review, changes have been adopted to Forms U-4 and U-5 to reflect new categories of registration and clarify the certification language. The changes also address the need to continually update agent records with information that comes to light after termination and streamline the disclosure of disciplinary information for a terminating agent through the use of a Disclosure Reporting Page for Form U-5.

CHANGES TO FORM U-4

Two major changes have been made to Form U-4. The changes appear on pages 1 and 4 of the form. On page 1, Item 11 has been updated to reflect the additional categories of registration utilized by the NASD, NYSE, and states. These categories are S-7 Securities Trader (NYSE), S-7 Trading Supervisor (NYSE), S-11 Assistant Representative/Order Processing, S-28 Introducing Broker-Dealer/Financial and Operations Principal, Securities Lending Representative, Securities Lending Supervisor, Approved Person, and Agent of the Issuer. The form also now contains a box to request the Series 65 Uniform Investment Adviser Law Examination, which may be required for investment adviser registration by some jurisdictions. In addition, one category, the Series 54 exam, has been deleted because it is no longer in use by the Municipal Securities Rulemaking Board (MSRB).

The other change to Form U-4 involves the consent language on page 4 of the form. A new item 7 has been added at the request of the NYSE and with the approval of the SEC. This item is designed to facilitate more effective service of notice of investigations or proceedings by self-regulatory organizations. Minor changes were made to the remaining items on page 4 that were then renumbered to account for the inclusion of the new item 7.

CHANGES TO FORM U-5

The majority of changes to this form were necessary to implement the use of the Disclosure Reporting Page (DRP-5) to report information relating to Items 13-15 on the form. As with the DRP adopted for Form U-4 last year, the DRP-5 consists of nine questions, eight of which are mandatory, designed to solicit the pertinent information needed to affect full disclosure of all matters relating to Items 13-15. As with the DRP, it is vital that firms fully complete the DRP-5 to report any information relating to these questions, as well as to update information previously reported, as the changes occur.

The signatory box on the bottom of Form U-5 now reflects the fact that the appropriate signatory must verify the accuracy and completeness of the information contained in and with the form. In addition, minor changes to the form have been made to allow more space for the explanations of reasons for termination in Item 12.

The instructions for Form U-5 have been revised to reflect the incorporation of the DRP-5 in a new item 4. In addition, a new instruction (number 5) has been included to remind firms that they have a continuing obligation to amend and update items 13-15 until final disposition of a reported matter, as well as the obligation to report matters that occur or become known after initial submission of Form U-5.

Copies of these new forms have been included with this mailing for your convenience. To request additional copies of the forms, contact NASD Member and Market Data Services at (301) 590-6500. Questions regarding this notice should be addressed to Ellen Badler, Assistant Director, Special Registration Review, at (301) 590-6743.


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