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Financial Advisor Disclosures: How a “Marked” Record Can Tank Your Career Mobility
What Criminal Charges Disqualify You from a FINRA License?
FINRA can statutorily disqualify an individual from becoming a registered financial advisor for several criminal offenses. Advisors are required to disclose any criminal issues or allegations on their Form U4 and undergo background checks. The most common disqualifying charges are felonies and certain misdemeanors related to a person's honesty and integrity.
The following criminal charges can lead to disqualification from a FINRA license:
- Any felony conviction or a guilty/no-contest plea to a felony within the last 10 years.
- Any misdemeanor conviction or a guilty/no-contest plea to a misdemeanor involving:
- Securities, investments, commodities, or insurance fraud
- False statements, perjury, bribery, or forgery
- The wrongful taking of property (e.g., theft, larceny, or extortion)
Even a pending felony charge can trigger a firm's internal review and lead to a temporary suspension or denial of a license, as firms are often hesitant to sponsor individuals with unresolved criminal matters.
You are required to disclose any and all felony charges, convictions, guilty pleas, and no-contest pleas on your Form U4, regardless of when they occurred. Misdemeanors of a fraudulent or deceitful nature must also be disclosed. Failing to disclose a reportable criminal matter is a serious offense that can lead to an automatic bar from the industry, as it demonstrates a lack of integrity. Member firms must report such offenses within 30 days to maintain compliance with FINRA regulations.
- Felony convictions: Automatically disqualify you for a period of 10 years from the conviction date.
- Certain misdemeanor convictions: Can also lead to disqualification or require you to seek a formal eligibility review from FINRA to get your license.
The only exception is for cases that have been formally expunged from your record by a court, as these records will not appear in a standard background check.
Can You Still Get a License With a Criminal Record?
Yes, in some cases. If you have a disqualifying event, such as a felony conviction that is more than 10 years old, or a non-disqualifying misdemeanor, you may be able to become a registered representative. However, the presence of any criminal history on your record can make it very difficult to get hired, as firms are risk-averse.
For a formal disqualification, you can seek an individual eligibility review with FINRA, though this is a complex and challenging process. This review allows FINRA to consider the specific details of your case, your rehabilitation, and your proposed supervision plan.
Expunging Criminal Disclosures from Your U4
An expungement is the most effective way to remove a criminal disclosure from your record. If a criminal charge was dismissed, or the records were sealed or expunged by the court, you can apply to have the disclosure removed from your Central Registration Depository (CRD) and BrokerCheck profiles.
AdvisorLaw can help advisors navigate the process by:
- Providing Expert Guidance: Our team of professionals is well-versed in FINRA regulations and can provide detailed guidance on the reporting requirements for criminal disclosures. We can provide advisors with a clear understanding of what needs to be reported and when.
- Expungement Assistance: We can assist advisors in seeking expungement for erroneous or outdated disclosures on their U4. Through the FINRA Rule 2080 waiver request process, we can initiate a waiver request and, if necessary, proceed to arbitration to remove or mitigate these disclosures.
- Individual Eligibility Review: In cases where advisors have felony convictions within the previous ten years or certain fraudulent misdemeanor convictions, AdvisorLaw can help with an individual review by FINRA. This review considers the nature of the offense and the advisor’s overall eligibility, offering an opportunity for a fair assessment.
Case Study: AdvisorLaw's Success Story
AdvisorLaw successfully assisted an Illinois-based financial advisor in removing a long-standing criminal disclosure from his record. We were able to get his misdemeanor drug charge from his college years expunged from his Iowa record, and then we submitted a request to FINRA to remove the disclosure from his CRD and BrokerCheck. The criminal disclosure was fully removed, restoring the advisor's perfect public record and career opportunities.
Protect Your Career with AdvisorLaw's Expertise
Navigating FINRA regulations and the process for removing criminal disclosures is complex. A single misstep can be career-ending. Our team specializes in representing financial advisors in these situations.
Whether you have a past criminal issue you need to address or are facing a current regulatory inquiry, our team can provide the expert guidance and representation you need. Contact us today for a confidential consultation to discuss your situation and how we can help. Our team is dedicated to advocating for financial advisors and providing a fair and equitable resolution for our clients.
Engage our experts today!