FINRA Approves Amendment to Supervision Rule Requiring Firms to Conduct Background Checks on Registration Applicants

The Board of Governors of FINRA approved amendments to FINRA's supervision rule that would expand the obligations of broker-dealers to check the background of individuals seeking to become associated persons of a firm to verify the accuracy and completeness of the information contained in an applicant's Form U4. Additionally, the amendments would also require firms to adopt written procedures in this area, which would include searching public records.

In its press release, FINRA announced that it plans to perform a search of publicly available criminal records for all registered individuals who have not been fingerprinted within the last five years. Once these searches are completed, FINRA said that it intends to conduct periodic reviews of public records to ascertain the accuracy and completeness of the information available to investors, regulators and firms.

See: Press Release.Related news: New FINRA Supervision Rules Approved by SEC (Regulatory Notice 14-10) (March 19, 2014) FINRA Files Proposed Rule Change to Amend Form U4 (August 14, 2013); SEC Approves FINRA Proposal to Consolidate Supervision Rules (with Lofchie Comment) (December 24, 2013).