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To sell stocks and bonds, you must obtain the Financial Industry Regulatory Authority's Series 7 license and pass a criminal background check. Felony convictions can make you ineligible for a Series 7 license for a minimum of 10 years. If you were charged with a misdemeanor and the case was dismissed, it may not be expunged from your record. As a result, FINRA may still disqualify you from acquiring a Series 7 license.
FINRA amended its by-laws to include the definition of "disqualification" on July 30, 2007. In that amendment, it states that disqualifying events can include "certain misdemeanor and all felony criminal convictions for a period of ten years from the date of conviction." While this language speaks to convictions, evidence of misdemeanors that involve theft or dishonesty can result in disqualification for a Series 7 license.
Disclosure on Form U-4
FINRA's Form U-4, the Uniform Application for Securities Registration or Transfer, is the form you will need to fill out to register with a broker-dealer. You must have a relationship with a broker-dealer to take the Series 7 exam. Question 14B on the U-4 asks if you have ever been charged with a misdemeanor that involves "investments or an investment-related business or any fraud, false statements or omissions, wrongful taking of property, bribery, perjury, forgery, counterfeiting, extortion, or a conspiracy to commit any of these offenses." Even if the charges were dismissed, you must honestly reply "yes" if the charges pertained to any of these circumstances.
Failure to Disclose
Failure to disclose charges that were filed against you could in itself be a disqualifying action by FINRA's standards. It is better to fully disclose the misdemeanor charges and explain the circumstances than hope that FINRA doesn't discover the charges during your background check. Statutory disqualification is for a period of 10 years from the date of the charges; however, the U-4 asks if you have ever been charged with a misdemeanor and does not limit your response to within the last 10 years.
When you answer "yes" to question 14B, you have the opportunity to provide a full explanation of the charges and their subsequent dismissal. A detailed explanation can help FINRA evaluate whether or not you should be disqualified.
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Barbara Gulin has been a freelance writer and editor since 2008. She has helped write curriculum for Asian elementary students to learn Engish and has written extensive content for Themomsresource.com. Gulin studied electrical and computer engineering at the University of Missouri, Kansas City. She is also a licensed life and health insurance agent.