To apply for registration as an agent, an individual must file Form U-4, which includes the required criminal, legal, and regulatory disclosures, along with the appropriate filing fee. A consent to service of process must also be submitted with the initial application (it doesn’t need to be re-submitted 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 all required documentation is submitted, registration becomes effective at noon on the 30th day after filing. The state administrator may choose to accelerate the process and make registration effective in fewer than 30 days. 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, all agents (and applicants) must disclose certain financial events, such as bankruptcy or compromises with creditors. An agent’s registration 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 addressing and resolving their financial issues, the administrator will likely grant effective registration.
Registered agents must notify the state administrator by filing a Form U-4 amendment when 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 generally be filed within 30 days of the event. However, 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 rules and process discussed previously apply to agents in the same way. However, an agent is not required 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 annually (by December 31st), they may continue to operate legally in a state. Eventually, an agent’s registration ends - for example, due to retirement, a job change, a career change, or being discharged. These situations are all treated as an agent’s termination, and the state administrator must be notified so the agent’s 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). The agent and the former broker-dealer complete, sign, and submit Form U-5. The agent and the new broker-dealer complete, sign, and submit Form U-4.
When a termination occurs, the state administrator must be notified “promptly,” which generally means within 30 days of the event.
Termination doesn’t necessarily mean the agent was fired. For example, an agent might take a sabbatical or another temporary leave of absence and terminate their registration during that period.
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