Glossary

A handy way to look up financial industry terms you may encounter.

Agent
A term used by states to describe a person licensed to engage in the securities business in that state.

Arbitration
A method to resolve a dispute where an unbiased person or persons (i.e., a panel of arbitrators) is appointed to hear and consider all sides of the dispute and provide a final and binding decision (referred to as an award).

Arbitrator
An independent, neutral person chosen to resolve disputes between parties.

Arbitration Award
An arbitrator’s final, written decision.

Branch Office
Any location identified by any means to the public or customers as a location at which a brokerage firm conducts investment banking or securities business. For purposes of BrokerCheck and BrokerCheck reports: (1) any branch office listed is currently active/open for business; (2) a firm may have multiple branch offices; and (3) a broker may be located (i.e., conduct business) at more than one branch office.

BrokerCheck Report
Reports provided as part of FINRA initiative that contain information about brokerage firms and brokers registered with FINRA or a national securities exchange to help investors determine whether to conduct, or continue to conduct, business with these brokerage firms and brokers. The information in these reports has been provided to the Central Registration Depository (CRD®) as part of the securities industry’s registration and licensing processes.

Clearing Firm
An organization affiliated with exchanges that completes securities transactions by taking care of validation, delivery and settlement. Clearing firms help ensure that executed trades are settled efficiently and within a specified time period. Also called a clearing corporation.

Corporation
The most common form of business organization, it is chartered by a state and given many legal rights as an entity separate from its owners.

Central Registration Depository (CRD®)
An online computerized system in which FINRA maintains the employment, qualification and disciplinary histories of more than 650,000 securities industry professionals and more than 5,000 brokerage firms that deal with the public.

CRD Number
A unique number assigned to brokers and brokerage firms as part of their registration application with FINRA.

Customer Dispute
A consumer-initiated complaint or investment-related arbitration proceeding brought against a broker and/or brokerage firm alleging sales practice violations, forgery, theft or misappropriation of funds.

Disclosure Event
An occurrence required to be reported as part of the FINRA licensing and registration process for brokers and brokerage firms. These events include criminal, regulatory and civil actions, as well as certain financial incidents.

Form BD (Uniform Application for Broker- Dealer Registration)
Brokerage firms file Form BD to register with the SEC, FINRA, other self-regulatory organizations (SROs), states and/or jurisdictions.

Form BDW (Uniform Request for Broker-Dealer Withdrawal)
Brokerage firms file Form BDW to withdraw their registrations with the SEC, FINRA, other self- regulatory organizations (SROs), states and/or jurisdictions.

Form U4 (Uniform Application for Securities Registration or Transfer)
Brokerage firms file Form U4 to register their brokers with FINRA, other self-regulatory organizations (SROs), states and/or jurisdictions.

Form U5 (Uniform Termination Notice for Security Industry Registration)
Brokerage firms file Form U5 to terminate a broker’s registration with FINRA, other self-regulatory organizations (SROs), states and/or jurisdictions.

Form U6 (The Uniform Disciplinary Action Reporting Form)
Regulators, states and/or jurisdictions use this form to report disciplinary actions against a broker or firm. FINRA uses Form U6 to report final arbitration awards against brokers and firms.

Inactive
A status indicating that a firm or broker does not currently have an effective registration. An inactive status typically results when a firm or broker has not completed a registration requirement (e.g., a broker has not completed a continuing education requirement or an applicant for registration has failed to submit a fingerprint card within the required time period).

Indirect Owner
A person who has the power to indirectly influence the management or policies of a brokerage firm, whether through ownership of securities, by contract, or otherwise.

Introducing Firm
A brokerage firm that can perform all of the functions of a broker except accept money, securities, or property from a customer.

Investigation
A disclosure event that may include inquiries before a grand jury or regulatory authority (i.e., U.S. Securities and Exchange Commission, FINRA or another self- regulatory organization, or a state securities agency).

Investment Adviser Public Disclosure (IAPD) Website
A Securities and Exchange Commission sponsored website that provides public users access to registration and disclosure information about investment adviser firms and investment adviser representatives.

Judgment
A court’s final determination of the rights and obligations of the parties involved in a court proceeding.

Lien
A legal right or interest that a creditor has in another’s property, usually lasting until the debt or duty that it secures is satisfied.

Limited Liability Company (LLC)
A type of company deliberately formed (consistent with state laws) to provide its owners and managers with limited liability and certain tax benefits.

Municipal Securities Broker
A broker engaged in the business of effecting transactions in municipal securities for the account of others.

Municipal Securities Dealer
Any person (including a separately identifiable department or division of a bank) engaged in the business of buying and selling municipal securities for his own account.

Partnership
A type of unincorporated business organization in which multiple individuals manage the business, share in the profits (or losses) of the undertaking, and are responsible for its debts and liabilities. Partnerships typically are governed by agreements that establish the extent of each partner’s responsibilities and/or liabilities.

Registration Category
A designation of the type of work a broker or brokerage firm is licensed to perform. For example, registration categories for a broker can include General Securities Representative or Principal.

SEC Number
A unique identification number assigned to a firm by the Securities and Exchange Commission.

Security
A type of investment issued by a corporation, government or other organization that offers evidence of debt or equity.

Self-Regulatory Organization (SRO)
An entity, such as FINRA, responsible for regulating its members by adopting and enforcing rules that govern its members’ business conduct.

Sole Proprietorship
A business fully owned and run by one person.

Succession History
A brokerage firm’s record of the acquisition, ownership and right to manage another firm’s assets and liabilities.

Suspended
A status indicating that a firm or a broker has been precluded from engaging in the investment banking or securities business generally or from engaging in a particular function (e.g., supervising others), usually as a result of a regulatory action.

U.S. Government Securities Broker
Any person regularly engaged in the business of effecting transactions in government securities for the account of others.

U.S. Government Securities Dealer
Any person engaged in the business of buying and selling government securities for his own account through a broker or otherwise.