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Reg Rep & Bankruptcy - Help
- Thread starter desperateone
- Start date
Several years ago (2001) I was laid off from a job at an online brokerage firm and was massively in debt and ended up filing for chapter 7. Prior to doing so, I contacted the NASD and they told me that it would not effect my chapter 7 with them, but that each state has a securities administrator and they may handle things differently. I contacted the state securities department of that state and they said it would have no effect on my licenses, so I filed. While going thru the chapter 7, I passed the series 55 exam and moved to another state. I had to disclose all this on my U4 but that was it. I have subsequently changed firms a few times and added a series 24 license. The State that I am in now always requires me to complete a balance sheet of my personal finances when I re-register after switching firms. Someone in that office explained to me years ago that the chapter 7 improves the financial standing of most people, making them less likely to commit fraud than someone deeply indebted, so they almost always tend to approved registrations (series 63) for people who have declared it on their U4. I have even had part-time jobs working for banks and for credit card collection companies since the chapter 7. Interestingly enough a few bankruptcy attorneys were unaware of what the consequences were for filing, if one was in the securities industry, so after exhaustive reading...I was actually informing them.
to continue the thread I found this link regarding the issue.
http://www.onwallstreet.com/article.cfm?articleId=2972
Q
My former firm is suing me on a promissory note I signed relating to advance compensation. I offered a nominal amount to settle the matter, which they rejected. I can't afford to pay them what they want--even if they get an award against me. I'm considering filing for bankruptcy, but I'm concerned about the effect on my license. Could I lose my license if I file for bankruptcy?
--M.K., New York
A
Section 525 of the Federal Bankruptcy law states that a government entity may not deny, revoke, suspend or refuse to renew a license, or discriminate with respect to employment against a person solely because that person is or has been a debtor or a bankrupt under the Bankruptcy Act or has not paid a debt that is dischargeable or was discharged under the act. It also states that no private employer may terminate the employment of or discriminate with respect to employment against such a person.
The failure to pay an arbitration award rendered against you, however, can result in the NASD commencing summary suspension proceedings to revoke your license. Filing for bankruptcy is one way to forestall this action. Still, fraud typically is not dischargeable in bankruptcy. So, if there was a finding of fraud by the arbitrators, the debt may not be wiped out by a bankruptcy filing. As a result, the NASD may still be able to pull your license.
In addition, where an individual has filed for bankruptcy, the regulators may take a closer look at your record to decide if other grounds exist for denying, revoking or suspending your license. For example, a prior bankruptcy that wasn't disclosed on your U-4 could subject you to revocation or suspension under the "statutory disqualification" provisions of the Securities Exchange Act of 1934. You could also find your license revoked or suspended under the same provision if there is an arbitration award finding you liable for unsuitable investment recommendations. Still, merely filing for bankruptcy should not affect your license.
http://www.onwallstreet.com/article.cfm?articleId=2972
Q
My former firm is suing me on a promissory note I signed relating to advance compensation. I offered a nominal amount to settle the matter, which they rejected. I can't afford to pay them what they want--even if they get an award against me. I'm considering filing for bankruptcy, but I'm concerned about the effect on my license. Could I lose my license if I file for bankruptcy?
--M.K., New York
A
Section 525 of the Federal Bankruptcy law states that a government entity may not deny, revoke, suspend or refuse to renew a license, or discriminate with respect to employment against a person solely because that person is or has been a debtor or a bankrupt under the Bankruptcy Act or has not paid a debt that is dischargeable or was discharged under the act. It also states that no private employer may terminate the employment of or discriminate with respect to employment against such a person.
The failure to pay an arbitration award rendered against you, however, can result in the NASD commencing summary suspension proceedings to revoke your license. Filing for bankruptcy is one way to forestall this action. Still, fraud typically is not dischargeable in bankruptcy. So, if there was a finding of fraud by the arbitrators, the debt may not be wiped out by a bankruptcy filing. As a result, the NASD may still be able to pull your license.
In addition, where an individual has filed for bankruptcy, the regulators may take a closer look at your record to decide if other grounds exist for denying, revoking or suspending your license. For example, a prior bankruptcy that wasn't disclosed on your U-4 could subject you to revocation or suspension under the "statutory disqualification" provisions of the Securities Exchange Act of 1934. You could also find your license revoked or suspended under the same provision if there is an arbitration award finding you liable for unsuitable investment recommendations. Still, merely filing for bankruptcy should not affect your license.