IARD System Frequently Asked Questions - Form Filing for IA Representatives
Disclosure

1. What is the Material Difference Flag and whom does it affect?

The Material Difference Flag applies to dually registered individuals (RR/RR, RR/RA or RA/RA), this flag is set whenever a difference exists in any of the factual Form U-4 DRP (Disclosure Reporting Page) fields for the same disclosure event (i.e., all DRP fields except for the last field, which is the Summary Detail/Representative Commentary Field). The flag acts as a notification to regulators that a difference exists.

Pending registration requests will not be approved until the difference is resolved. If the Material Difference Flag is not resolved by the respective filing firms within 30 days, the appropriate regulator(s) will be notified.

2. How is the Material Difference Flag viewed and how are firms notified?

The Material Difference Flag can be viewed under View Individual: Individual’s Composite Record, and in the specific Disclosure Occurrence(s) that triggered the flag. FINRA staff will send an inquiry or deficiency letter (as appropriate) to the Outstanding Disclosure Letters Queue for all firms with which the individual is currently registered.

3. How is a Material Difference resolved?

Firms are obligated to review the Disclosure Reporting Pages (DRPs) in question, identify the differences in the DRP details, and contact the individual and/or the other firm(s) to determine the basis for the Material Difference and how the difference can be resolved. Once the firm is notified, if the non-filing firm agrees with the information contained in the filing, the non-filing firm can submit a Concurrence Filing through Form Filing or the “Other Firm U4 Filing” Queue.

FINRA will notify the appropriate regulator if the Material Difference has not been resolved in 30 calendar days from the date the flag was set. The filing firm can submit an Amendment Filing to resolve the Material Difference, or both firms can agree on a revised version.

4. An individual is leaving Firm A to work for Firm B. Firm B relicenses that individual and, in doing so, updates a DRP. Firm A has not yet submitted a Form U-5 for that individual. What is Firm A's responsibility? Does Firm A need to concur or amend the information prior to submitting a Form U-5?

Firm A must submit either a Concurrence Filing or an Amendment Filing before it terminates the individual, and while the firm association remains open. If Firm A does not concur or amend before it terminates the individual, the termination does not resolve the discrepancy. If Firm A does not concur or amend within 30 days, regulators will be consulted to resolve the discrepancy.

5. To whom should an IA-only firm direct disclosure questions?

The firm should contact the appropriate state directly. The states perform disclosure review for investment adviser representatives.

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