Statutory Disqualification
Conditions that bar a person from associating with a member firm: any felony conviction or securities/money-related misdemeanor within the past 10 years, plus certain regulatory bars, expulsions, and false statements on registration forms.
Expect a fact pattern asking whether the person is disqualified, with the tell buried in two facts: the type of offense and how long ago it happened. Trap answers reverse the felony/misdemeanor rule — a finance-related misdemeanor counts, an ordinary one doesn’t, but ANY felony does — or pick a date outside the 10-year window (measured from the date of conviction, not release from prison; some banks borrow the banking-law “conviction or release, whichever is later” phrasing — wrong here). The other trigger family: an SEC or SRO bar, expulsion, or injunction disqualifies regardless of the 10-year clock. Re-entry runs through FINRA’s eligibility process (Form MC-400), never automatic reinstatement.
Don’t confuse this with the related forms and duties. Form U4/U5 is the disclosure vehicle — disqualifying events get reported there, but the form isn’t the disqualification itself. A Continuing Education lapse makes you CE-inactive (no registered duties or compensation until cured) — administrative, not a statutory bar. And the 1934 Act defines disqualification; this is one consequence it authorizes. Memory hook: “any felony, finance-flavored misdemeanor, ten years.”
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