Notes

Form U5 Disclosure and the Fraud Enforcement Act, commonly known as the Securities and Exchange Commission (SEC), has established a process for the protection of investment securities. The U5 form is the standard form that investment companies fill out when they are applying for federal government funding or registration with the SEC. This form requires the submission of the name, address, date of birth, social security number and place of employment of the potential investor. Upon receipt of this information from a potential investor, the SEC determines whether the investor poses a higher risk to the investment fund than other people and under what circumstances the investor should be ineligible to participate in the program.
Form U5 is not the only form available to investors. An investor may also choose to file an alternative disclosure, or an "atable" version, which is not considered a U5 disclosure and does not require the same forms. The form U5 contains a disclosure statement that allows investors to invest without being considered for registration. It does not include all of the disclosure requirements of the SEC, and investors are still required to provide information in support of the investment. There are FINRA Disclosure expungement that apply to new adult children of married couples seeking investment capital.


An alternative form can be filed by an investor who believes that he/she may have been the victim of fraud or other illegitimate activity. However, even if filing an alternative discloses possible fraud, the claim cannot be allowed against the insured. U5 disclosure is a way for investors to reduce their risk of fraud and other abuses of the law. Investors may also be denied registration with the SEC if they have misrepresented material facts about the investment. The same can be stated for other securities fraud.

There are certain circumstances in which an investor may be able to work around the forms and still receive benefits from the registration. This is because an investor can file under U5 with a new broker. However, there is no guarantee of merit or even a return on the money invested if the broker's firm does not file the appropriate forms with the SEC. In the event that the broker fails to file the correct forms, then the broker may be held personally liable for fraud committed by his/her firm and also for false statements made to the SEC by the broker (even if the broker's firm was not the one filing for the new U5).

An expungement may take the form of a certification or it may occur after a judgment of expungement has been rendered. It may take the form of an express assurance or it may result in the temporary or permanent destruction of an asset. An express assurance is when an asset is destroyed so that its value is no longer accessible to the defrauder or the victims.

An asset being declared not subject to U5 protection protects the victim from further fraud by the same party. It may affect all or only some of the information contained in an asset, such as records, access rights, titles or other financial information. On the other hand, it does not affect any previous financial information or data. In some cases, an expungement can be directly related to an insurance application or loan Modification application. When this happens, the application may be delayed until the U5 status is officially set.

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