The purpose of this Information Memo is to provide
notice to the New York Stock Exchange Member and Member Firm
Community that the Division of Enforcement is revising its policy
with respect to individual respondents’ disclosure requirements. In
particular, the Enforcement Division will no longer require
individual respondents to disclose the existence of an investigation
on the Form U-4 (the Uniform Application For Securities Industry
Registration or Transfer) upon receipt of a jurisdiction letter.
Rather, disclosure of the investigation will take place after a
“Wells” notice has been given or when Enforcement communicates its
intention to recommend disciplinary action.
The requirement to disclose New York Stock Exchange
investigations on the Form U-4 is located in the general
instructions section of the Form U-4. In that section
“Investigation” is presently defined to include, among other things:
(i) U.S. Securities and Exchange Commission investigations “after
the ‘Wells’ notice has been given;” (ii) NASD investigations “after
the ‘Wells’ notice has been given or after a person associated with
a member, as defined in the NASD By-Laws, has been advised by the
staff that it intends to recommend formal disciplinary action;” and
(iii) “formal investigations by other SROs.” The Exchange is
requesting a revision to the instructions to the Form U-4 to reflect
the Exchange’s new policy regarding individual respondents’
disclosure obligations. Because it may take some time to implement
this change, jurisdiction letters from the Enforcement Division will
now state that receipt of the jurisdiction letter is not a
reportable event.
In addition,
because the Form U-4 must now be updated to reflect the existence of
an investigation either at the “Wells” stage, or when Enforcement
staff communicates its intent to recommend formal action, the
Enforcement Division will notify individual respondents when such
circumstances occur, that they constitute reportable events.
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