In furthering its mission to protect investors and market integrity, the Financial Industry Regulatory Authority (FINRA) has established various rules and regulations for its broker-dealer firm members, including with respect to the termination of a firm employee (or “associated person”). Specifically, FINRA member firms must file a Uniform Termination Notice for Securities Industry Registration, commonly called a Form U5, within 30 days after terminating an associated person’s employment. The member firm must disclose on the Form U5 whether the separation was voluntary, a permitted resignation, or a termination. If the separation was voluntary, the member firm is not required to describe the circumstances surrounding the separation. However, when a member firm describes a terminated employee as having been “permitted to resign,” “discharged,” or “other,” it must also provide an explanation of the circumstances surrounding the separation. The disclosures provided on a Form U5 then become part of the associated person’s Central Registration Depository (CRD) record, which the public can access through BrokerCheck, FINRA’s online investor protection tool.
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