To apply for registration as an agent, the individual and their broker-dealer must file Form U-4, provide the required criminal, legal, and regulatory disclosures, and pay the appropriate filing fee. The initial application must also include a consent to service of process (you don’t need to re-submit it later).
Depending on the broker-dealer’s business and the requirements of a particular state, the state may also require a surety bond to be posted on the agent’s behalf.
The processing timeline is the same as it is for broker-dealers. If the filing is complete, registration becomes effective at noon on the 30th day after filing. The state administrator may choose to make registration effective sooner.
Once registered, agents (and other registered persons) may not state that they were “approved” by the state administrator.
Unlike broker-dealers, agents are not subject to minimum financial requirements (there’s no minimum net capital requirement). Even though agents don’t have to maintain a specific asset level, both agents and applicants must disclose certain financial events, such as bankruptcy or compromises with creditors. An application may also be denied due to insolvency.
Insolvency or bankruptcy doesn’t automatically prevent registration. The administrator typically evaluates these situations case by case. If the applicant is actively addressing their financial issues, the administrator will often grant effective registration.
Registered agents must file a Form U-4 amendment to update the state administrator if any material information on the form changes, including:
*Only customer complaints involving accusations of theft or resulting in large settlements must be reported.
Most updates must be filed within 30 days of the event. Statutory disqualification events must be updated on Form U-4 within 10 days.
Canadian agents may obtain limited registration through their Canadian broker-dealers. The same rules and process discussed previously apply to agents.
However, an agent does not have to be a member of a Canadian self-regulatory organization (SRO) or a stock exchange.
As long as an agent remains in good standing and renews registration each year (by December 31st), they may continue to operate legally in a state. Eventually, an agent’s registration will end - for example, due to retirement, a job change, a career change, or being discharged. In this context, these events are all treated as an agent’s termination, and the state administrator must be notified so the registration can be canceled.
Both the broker-dealer and the agent are responsible for notifying the state administrator when the agent’s employment ends. This is done by filing Form U-5. The agent and a firm supervisor sign the form and submit it to the appropriate state administrator(s).
If an agent leaves one broker-dealer and joins another, all three parties must notify the appropriate state administrator(s):
When a termination occurs, the state administrator must be notified “promptly,” which generally means within 30 days.
Termination doesn’t necessarily mean the employee was fired. For example, an agent might take a sabbatical or another temporary leave of absence and terminate registration during that period.
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