What type of incident must be reported to FINRA on an amended U-4?

The requirement to report incidents on an amended U-4 is specifically tied to matters that could impact an individual's suitability to carry out their duties in the securities industry. Allegations of theft or misappropriation of funds are serious breaches of integrity and ethics that directly affect an individual's trustworthiness and professionalism. Such allegations indicate potential criminal activity or unethical behavior that could jeopardize investor protection and the overall integrity of the securities markets.

When an individual is subject to allegations that involve theft or the misappropriation of funds, this suggests a significant risk to client assets and trust. Consequently, reporting these incidents ensures that regulatory bodies, like FINRA, are aware of potential misconduct and can take appropriate action to protect investors and maintain fair markets.

In contrast, allegations of poor service, complaints about commission rates, or general customer dissatisfaction do not carry the same level of severity regarding ethical and legal implications. These issues are often subjective and related to business practices rather than direct misconduct, and thus they do not require reporting on an amended U-4 form. By focusing on incidents that could undermine the integrity of the financial system, FINRA ensures a safer environment for investors and the markets.