Maintaining Correct Disclosures

When completing a renewal for any professional designation or certification, be sure to read all the questions carefully.

For example, one of the questions on the CFP renewal application is “Have you ever been a defendant or respondent in a civil action including, but not limited to, a lawsuit, arbitration or mediation?”  Think through everything that you have done since your last renewal – does this apply to you?

If you answer “no” and the real answer is “yes” be prepared to receive a letter stating that you are under investigation.

This applies to your U-4 as well.  When was the last time you updated your U-4 and reviewed all the disclosure questions in Item 14?  I have discovered unanswered questions when reviewing U-4s of late.  IARs may not have updated their U-4 since several questions were added several years ago.

Question 14K asks several financial questions.  One, “have you made a compromise with creditors, filed a bankruptcy petition or been the subject of an involuntary bankruptcy petition?”  You may not think about it, but if you have done a short sale on your home, that is a compromise with creditors and must be disclosed.

I suggest reviewing and confirming the information on a U-4 during your annual compliance review.

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2 Responses to Maintaining Correct Disclosures

  1. Jeremy Smith says:

    Does a compromise with creditors have to be disclosed on adv part 2b, and by extension, disclosed to prospective clients?

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