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94-74 NASAA Publishes Form Revisions For Public Comment:

Comment Period Expires October 1, 1994


Senior Management
Legal & Compliance

Executive Summary

The North American Securities Administrators Association (NASAA) has published form revisions in draft format for public comment in the September 1994 edition of the Commerce Clearing House (CCH) NASAA Reports. The comment period expires October 1, 1994, and is the first opportunity for the public to comment on revisions to Forms U-4 and U-5. The forms are being revised for implementation scheduled to coincide with the start up of the redesigned Central Registration Depository (CRD). A proposed revision to existing Item 7 of Form BD with disclosure detail that parallels the Form U-4 was also published for comment. NASAA is seeking comment and approval now because these changes are critical to the continuation of the design and construction phases of the new CRD. The NASD urges members to review this Notice and the text of the form revisions. The September NASAA Reports will contain a full description of the changes to the forms along with the text of the revisions.


The NASD has undertaken an extensive redesign effort to improve the CRD and move toward total electronic filing of registration-related forms. Currently scheduled for pilot phase during fall 1995, the redesigned CRD will offer efficient processing of registration-related filings and user friendly access to information contained in those filings for all industry and regulatory participants. Of critical importance to the form revisions and redesign process is the uniform collection and organization of disclosure information. Input at this time will allow the NASD to move forward with the design and construction phases of the new CRD based on the changes made to the uniform forms.

To that end the NASD, NASAA, the Securities and Exchange Commission (SEC), and other self-regulatory organizations have undertaken a joint effort to review and revise the Forms U-4, U-5, and BD. NASAA is publishing the revisions for public comment as part of their form revision approval process. This is the first opportunity the public has to comment on the revised Forms U-4 and U-5 and gain insight into how the information will be collected and stored in the revised CRD. Implementation of the new forms will coincide with implementation of the redesigned CRD. Prior to implementation the NASD Board must first approve and then the SEC must publish the form revisions for comment and subsequent approval. Members are urged to review and comment at this time. Comments made will be considered for their impact on the form revisions and CRD redesign process.

Overview Of Disclosure Revisions

The most significant changes relate to the disclosure questions on Forms U-4, U-5, and BD. The revisions will provide more precise detail reporting to support new functionality created by CRD's redesign.

The changes include:

  • Item 22, Form U-4, and Item 7, Form BD, and the parallel disclosure items on the Form U-5, have been made consistent with each other to the extent possible.

  • The questions relating to disclosure have been categorized to provide a uniform format to collect, display, and sort disclosure detail.

  • Each category of disclosure has its own custom Disclosure Reporting Page (DRP) soliciting detail unique to that category.

  • Specific data are requested on each custom DRP in detail to provide the information that regulators have indicated they need to make informed registration decisions. The revised DRPs require more detail than the current DRPs, which will reduce the number of requests for additional disclosures that prolong the review and registration process.

"Customer Complaint" Question

Regulators have not yet reached a consensus as to how the current "Customer Complaint" item on the Forms U-4 and U-5 should be revised. Regulatory and industry representatives will continue to develop enhancements to this question. Given the current status, the revised versions of Forms U-4 and U-5 have temporarily retained the current language. Any revised text will be published for public comment as part of the final approval and implementation process.

Other revisions include:

  • Expansion of Page 1 of Form U-4 and the parallel items on Form U-5 to handle the registration of non-members and to accommodate multiple types of registration or notices of termination for Investment Adviser Representative and Agent of Issuer registrations.

  • Addition of a statement to Page 4 of Form U-4 that will be executed by the applicant and retained by the member firm, that authorizes the member firm to make electronic filings on behalf of the applicant.

  • An option for the applicant and member firm to request on the Form U-4 processing under a Temporary Registration Program. This program is intended to replace the existing Temporary Agent Transfer (TAT) Program. The new program will result in expedited handling for eligible per sons including most individuals with "Yes" answers on their Form U-4 who have no new disclosure upon transfer. If there is new disclosure, the applicant may have an opportunity to gain a Temporary Registration while that disclosure is reviewed.

  • An opportunity for an individual to provide a summary of the circumstances relating to an internal review disclosure submitted by the individual's former employer on the Form U-5. Individuals already have the opportunity to provide responses to other Form U-5 disclosures on their next U-4 firing upon transfer to a new employer.

Other changes planned for Form BD, but not completed at this time, will be offered for comment before form implementation.

The NASAA comment period will conclude October 1, 1994.

Direct any comments to:

Ms. Renee Erdmann
Securities Department
Post Office Box 4009
Helena, Montana 59604

or FAX at (406) 444-5558.

Questions regarding this Notice should be directed to John F. Vaughn, Assistant Director, NASD Membership Department at (301) 590-6865.

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