Filling out this form wrong could cost you your job
Q: When I was first hired, my firm asked me about outside business activities, and I fully disclosed some real estate ventures I was involved in. Each year for the past four years, my firm has had me complete a form asking if there were any other outside business activities, and I indicated that there were not. My manager is now telling me that I may have misrepresented my answers on those subsequent forms by not including the original ventures that I had previously disclosed. I don’t understand. Why would I have a problem when I already disclosed those activities?
A: I’ve covered this in the past but it warrants repeating again. You need to carefully read those annual OBA disclosure forms. In most cases they do not ask if you have any OBAs that you haven’t previously disclosed or if you have any “new” OBAs to disclose. In my experience they simply ask whether you have any outside business activities. Period. Assuming that to be the case, taking the position that you can answer “no” or “none” on those forms just because you previously disclosed the activity is disingenuous and very likely misleading.
Form U4s and U5s don’t always match up, but it’s still the advisor’s responsibility to be proactive, writes compliance expert Alan J. Foxman.March 6
How often should CCOs pay a visit to branch offices?April 23
It’s not easy, but advisors who believe they were wronged can request their records be expunged, an expert says.January 9
I could be wrong, and the form could ask you to disclose any OBAs that were not previously disclosed and, if that’s the case, then you certainly may have a point. But from what I’ve seen, most of these forms just ask you to list your OBAs regardless of whether you’ve disclosed them in the past. If that’s the case, I hate to say it, but you’re likely looking at some form of disciplinary action.
The lesson to be learned here is don’t assume you know what a disclosure form is asking. Make sure you read it carefully and, when in doubt, ask. Go to your supervisor, ask your compliance officer, ask an attorney to review it but make sure you know what’s being asked of you because a simple mistake like this will affect your career.
Firms take these disclosures very seriously and a misrepresentation like this can often result in termination. Even worse, the termination will then frequently result in a FINRA investigation for “causing the firm to file a false report.”
In addition to being fired, you could also face a suspension and a fine.
All from the carelessness of not carefully reading a question.