Last year, the Financial Industry Regulatory Authority (FINRA), a non-governmental organization that regulates member brokerage firms and exchange markets, approved proposed Rule 3110(e), which enhances the background screening requirements already in place for FINRA-member institutions and registered individuals. That new rule became effective on July 1, 2015. The primary change expands a member firm’s obligation to investigate the background of applicants for registration by actually requiring the member firm to verify the completeness and accuracy of information that an applicant for registration provides on his or her Form U4.1 According to Richard Ketchum, FINRA Chairman and Chief Executive Officer, the new background check rules reflect “important initiatives to improve the accuracy and totality of details reported on a registered individual’s Form U4” and now impose a requirement that firms “use publicly available records to verify that information.”
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