FORM U-4 and U-5:
 a not so merry go round

The stock market, by its very nature, has its ups and downs and its cycles --- much like riding a carousel. After many years of a raging Bull, Wall Street is either in the midst of a trying to claw its way out of a bear market or mired in one.  For securities industry employees the fun times seem to be over, at least for now. Brokerage firms are tightening their belts and the pink slips are flying, leaving those brokers that remain under the added pressure of picking up the slack.  How long will you have a job? How long will you even want the job you have? 

Today more than ever, leaving your job and finding a new one raises a myriad of issues critical to your future as a broker, particularly when competition for both jobs and customers is fierce. That’s why the Securities Industry Commentator™ announces this inaugural installment of Looking Out For U™ , a regular column covering developments, rule changes, enforcement actions, and litigation involving the Uniform Application for Securities Industry Registration or Transfer (Form U-4) and the Uniform Termination Notice for Securities Industry Registration (Form U-5). In upcoming installments of Looking Out for U™, we will attempt to analyze and answer some critical questions:

• What are the potential pitfalls of signing an employment contract?
• Can you negotiate the terms of an employment contract?
• If the contract says that you can’t take any accounts with you, can you renegotiate that provision when you’re ready to leave?  And if not, what about the account you opened for Mom or your High School friend?
• What happens if your sales assistant or other brokers join your new employer when you leave?
• Can your former employer sue you for stealing away brokers and accounts?
   
• What will your former employer put on your Form U-5 when you leave – and does it really matter?
• Is the reason for your leaving a firm negotiable, and if you do negotiate this, will the courts uphold the agreement?
• Can your employer threaten to give you a “dirty” Form U-5 if you refuse to play ball?
  
• Once you start a new job, what does each section of the Form U-4 mean and how do you fill it out?
• What negative information about yourself personally and professionally must you disclose on your Form U-4? 
• How do you handle that eight year old DWI conviction  or your arrest for assault when you were 17 years old?

This series of articles is designed to address some of the key questions/concerns that so many of you have – or will have – at some point in your career.  In the end, we hope to provide you with some insight and the benefit of forethought, so that when you ride that carousel, you’ll leave holding the brass ring.