Disciplinary Information FAQs

If the matter disclosed is a disqualification from registration under either Section 8a(2) or 8a(3) of the Commodity Exchange Act, the application may be reviewed by an internal NFA committee. The committee will review the circumstances of each disqualification independently and decide whether to approve the registration or recommend that a proceeding be initiated to deny the registration.

In a criminal case, adjudication is the determination by the court that the defendant is guilty or not guilty.

Form 7-R and Form 8-R Disciplinary Information-Criminal Disclosures, Question B specifies which misdemeanor plea or conviction requires disclosure. NFA's Registration Investigations staff is available at (312) 781-1410 or (800) 621-3570 if you've read the Disciplinary Information-Criminal Disclosure questions and are still not sure.

The matter should be reported as a felony or misdemeanor based upon the potential sentence.

If the matter could result in a sentence of imprisonment for more than one year, it would be equivalent to a felony. Felony charges to which you pled guilty or nolo contendere (no contest) to, or were convicted or found guilty of should be disclosed under Form 7-R or Form 8-R, Disciplinary Information-Criminal Disclosures, Question A.  If felony charges are pending against you, you must answer "Yes" to Form 7-R or Form 8-R Disciplinary Information-Criminal Disclosures, Question C.

If the matter could result in a sentence of imprisonment for any period of at least six days but not more than one year, it would be equivalent to a misdemeanor. For example, if the maximum sentence is imprisonment for thirty days, the offense would be a misdemeanor. Specified misdemeanor charges to which you pled guilty to or of which you were convicted or found guilty should be disclosed under Form 7-R or Form 8-R, Disciplinary Information-Criminal Disclosures, Question B. If charges to any of the specified misdemeanors are pending against you, you must answer "Yes" to Form 7-R or Form 8-R, Disciplinary Information-Criminal Disclosures, Question C.

If felony charges are pending against you, you must answer "Yes" to Form 7-R or Form 8-R, Disciplinary Information-Criminal Disclosures, Question C.

If charges to any of the specified misdemeanors are pending against you, you must answer "Yes" to Form 7-R or Form 8-R, Disciplinary Information-Criminal Disclosures, Question C.

You do not need to answer "Yes" to any criminal disclosure question if you entered a plea of not guilty to and were not convicted or found guilty. However, if you pled guilty or nolo contendere (no contest) to, or were found guilty of a felony, you must answer "Yes" to Form 7-R or Form 8-R, Disciplinary Information-Criminal Disclosures, Question A, even if it did not result in a conviction. You must answer "Yes" to Form 7-R or Form 8-R, Disciplinary Information-Criminal Disclosures, Question B, if you pled guilty to or were found guilty of a specified misdemeanor even if it did not result in a conviction.

You do not have to disclose a plea of nolo contendere (no contest) to a specified misdemeanor, however, if you were not convicted or found guilty.

Income tax offenses are treated like all other criminal matters. A plea of guilty or nolo contendere (no contest) to, or a conviction or finding of guilty of a felony income tax offense, requires disclosure under Form 7-R or Form 8-R, Disciplinary Information-Criminal Disclosures, Question A. A plea of guilty, conviction or finding of guilty of a misdemeanor income tax offense described in Form 7-R or Form 8-R requires disclosure under Disciplinary Information-Criminal Disclosures, Question B. A pending felony or specified misdemeanor income tax charge must be disclosed under Disciplinary Information-Criminal Disclosures, Question C. NFA's Registration Investigations staff is available at (312) 781-1410 or (800) 621-3570 if you've read the Disciplinary Information-Criminal Disclosure questions and are still not sure.

Matters that are the subject of a general court martial are considered felonies and matters that are the subject of a special court martial are considered misdemeanors. Otherwise, the same disclosure requirements apply as cases heard in civilian criminal courts. NFA's Registration Investigations staff is available at (312) 781-1410 or (800) 621-3570 if you've read the Disciplinary Information-Criminal Disclosure questions and are still not sure.

Gambling offenses are treated like all other criminal matters. If you pled guilty or nolo contendere (no contest) to, or were convicted or found guilty of a felony gambling offense, you must answer "Yes" to Form 7-R or Form 8-R, Disciplinary Information-Criminal Disclosures, Question A. If you pled guilty to, were convicted or found guilty of a misdemeanor gambling offense, you are required to answer "Yes" to Form 7-R or Form 8-R Disciplinary Information-Criminal Disclosures, Question B. If felony or misdemeanor gambling charges are pending against you, you must answer "Yes" to Form 7-R or Form 8-R, Disciplinary Information-Criminal Disclosures, Question C. NFA's Registration Investigations staff is available at (312) 781-1410 or (800) 621-3570 if you've read the Disciplinary Information-Criminal Disclosure questions and are still not sure.

No. The Commodity Futures Trading Commission requires that all criminal matters involving:

  • felonies to which you have pled guilty, nolo contendere (no contest) or been convicted or found guilty; and
  • specified misdemeanors to which you have pled guilty, or been convicted or found guilty

be disclosed, regardless of whether they have been expunged, set aside or sealed; there was a conditional discharge or post-conviction dismissal; a state certificate of relief from disabilities was issued; or a pardon was granted. However, if you entered a nolo contendere (no contest) plea to a misdemeanor, you do not have to disclose it if you were not convicted or found guilty.

It is best to request the entire file from the court and submit all the documents to NFA. NFA will probably request additional documents from you if your documents do not reflect all of the following information: 

  • The complaint
  • Your entry of a plea or plea agreement
  • Judgment/conviction
  • The sentence
  • Proof that you completely satisfied your sentence
  • The final outcome of the court's action  

The court where the case was handled can provide copies of the court documents. If court documents are unavailable, obtain a certified letter from the court providing the reason the documents are not available.

A Firm DMP or Individual DMP is a filing made in NFA's DMP Filing System that provides details of event(s) being disclosed on the Form 7-R and Form 8-R Disciplinary Information Disclosure questions, respectively. If a disclosure question is answered "Yes" on the Form 7-R or the Form 8-R, a DMP must be filed for each matter that caused the "Yes" answer. For example, if an individual was convicted of a felony in two separate cases and answers "Yes" to the disclosure question about criminal felony convictions, a separate DMP for each of the cases must be filed. Please note you cannot access the DMP Filing System for a firm or an individual until after you have filed the firm's Form 7-R or the individual's Form 8-R. Supporting documentation related to a disclosure may be provided using the upload function in the DMP Filing System.

Regulatory and non-regulatory actions taken by the CFTC, NFA or U.S. futures exchanges do not need to be disclosed since NFA is already aware of them once they are entered into NFA's BASIC system. However, an individual must answer "Yes" to Form 8-R, Disciplinary Information-Financial Disclosures, Question J if the individual failed to pay any arbitration awards involving CFTC-regulated products, CFTC civil monetary penalties, CFTC restitution amounts, CFTC disgorgement amounts, or CFTC reparations amounts.

Failure to disclose disciplinary matters will result in a $1,000 late disclosure filing fee and could be deemed an additional disqualification from registration. It is in your best interest to disclose all applicable matters.

The failure to answer "Yes" when a "Yes" answer is required, or failing to file a Disclosure Matter Page (DMP) for each matter, will result in a $1,000 late disclosure filing fee and could result in the firm's or individual's registration being denied or revoked.

In addition, the firm's principal's failure to answer "Yes" when a "Yes" answer is required, or failing to file a DMP(s) for each matter, will result in a $1,000 late disclosure filing fee and could also result in the firm's registration being denied or revoked.

When an individual is sponsored as an AP by or is a principal of multiple entities, each sponsor bears equal responsibility to perform the necessary due diligence, and each sponsor will be assessed the $1,000 late disclosure filing fee.

Please review NFA's policy on failure to disclose by reading these Notices to Members: Failure to Dislclose Material Information on Registration Applications and Late Disclosure Filing Fee.

It is not necessary that the applicant or registrant intentionally fails to disclose the information to be disqualified from registration under the Commodity Exchange Act. Practically speaking, a firm, or individual who knows about the information that is required to be disclosed but fails to disclose that information, either in an application or an update, has willfully failed to disclose material information, absent credible evidence that shows otherwise.

NFA reviews each failure to disclose and evaluates the explanation provided for the non-disclosure to determine whether the circumstances surrounding the non-disclosure were willful. If NFA determines that the failure to disclose was willful, the non-disclosure constitutes a basis for an adverse registration action.

Criminal matters resulting in dismissal after completion of probation

Many states have a procedure to handle certain criminal offenses that do not ultimately result in a conviction. These are commonly known as "diversion programs." Often, the offender pleads guilty and the judge "withholds adjudication," which means the judge does not find the offender guilty. Instead, the offender is sentenced to supervision, probation or something similar. If the offender satisfactorily completes the supervision or probation, the guilty plea is vacated and the case is dismissed. Often, the judge, the prosecutor or the offender's lawyer tells the offender that the criminal case doesn't need to be disclosed in any kind of application. Sometimes, the case is ordered to be expunged from all official records.

However, the CFTC still requires a "Yes" answer to a question in the Disciplinary Information-Criminal Disclosures section even if:

  • the matter has been expunged or the records sealed;
  • there was no adjudication or finding of guilt;
  • the guilty plea was vacated or set aside;
  • the matter was dismissed upon completion of the diversion program;
  • the judge, prosecutor or defense lawyer said that disclosure is not required; or
  • another regulatory body or self-regulatory authority doesn't require disclosure.

Regulatory matters reported to another regulatory body or self-regulatory authority

Regulatory matters, particularly in the securities industry, are often reported in the FINRA's Web CRD system by either an employer, the agency that took the action or the person subject to the action.

The regulatory action must still be disclosed by answering "Yes" to the pertinent Disciplinary Information Regulatory Disclosure question and a Disclosure Matter Page (DMP) filed. The fact that the matter was disclosed in FINRA's Web CRD system will not be considered evidence that the failure to disclose was not willful.

The individual told the firm about a disclosable matter, but the matter is not disclosed on the Form 8-R.

All firms must electronically file Form 8-Rs on behalf of their principals and individuals requiring registration as an associated person. Generally, someone at the firm completes the Form 8-R, including answering the Disciplinary Information disclosure questions, based on the information that the individual provides to the firm. Sometimes, the firm does not answer the Disciplinary Information disclosure questions correctly, answering "No," when the answer should be "Yes" or not filing a DMP for each matter.

Each individual must electronically review the Form 8-R after the firm files it and electronically verify that the information contained in the Form 8-R is accurate and complete. If the individual verifies the information without thoroughly reviewing it or relies on the firm to have accurately completed the Form 8-R, the CFTC considers the failure to include the disclosable matter as willful. An individual should never electronically verify that an application containing incorrect information is accurate. In addition, the individual should not verify the application until all DMPs are filed. The individual should let the firm know about the inaccuracy and verify the application's accuracy only after the firm corrects the information.

The individual's registration or license was subject to special conditions

Some regulatory bodies, including various states, and self-regulatory authorities allow individuals to act in a registered licensed capacity but only if they and/or their employer comply with certain conditions. Commonly these include special supervisory or reporting requirements or restrictions on the type of activities the individual can engage in or the type of customers the individuals may do business with.

These special conditions or restrictions must be disclosed in response to the Form 8-R Disciplinary Information-Regulatory Disclosure questions even if the conditions or restrictions are no longer in place. Additionally, conditions or restrictions that are included in an agreement with the regulatory body (these types of agreements are generally not reported in FINRA's Web CRD system) rather than an order must also be disclosed.

To avoid being disqualified from registration based on a failure to disclose, it is critical to carefully read the instructions and the questions on the application. A question that is answered incorrectly because it was misunderstood or misread can result in severe consequences, including denial or revocation of registration.

If you have any concerns regarding whether a matter must be disclosed, rely only on advice from NFA Registration Investigations or Legal staff.

If any information provided by the firm or individual on the application changes or a matter that requires disclosure on the application occurs after the application is filed or registration is granted, the new information must be promptly disclosed to NFA. All individuals should advise the firm of the new information, and the firm must file the update on their behalf.

The failure to promptly update information will result in a $1,000 late disclosure filing fee and can also result in the registration being denied or revoked.

Refer to Failure to Disclose Disciplinary Information on a Registration Application for more information.

Occasionally we will find out about matters that were not reported on Form 7-R or Form 8-R, and we may need information from you to determine if the matter(s) should have been disclosed. For example, we may require you to provide documentation indicating that no criminal charges were filed after an arrest, in which case a letter from the applicable district attorney or arresting agency or documents from a court search may be sufficient. If we cannot determine from the FBI rap sheet whether a matter was a misdemeanor or a felony, we may require you to provide documentation to make that determination. If you were charged but found "not guilty" after a trial, we may require evidence of that, too.

No. Only findings made by a U.S. or non-U.S. governmental body (other than the CFTC) require disclosure under Form 7-R or Form 8-R Disciplinary Information-Regulatory Disclosures, Question E. However, sanctions imposed by an SRO (other than NFA or U.S. futures exchange) or U.S. or non-U.S. governmental body (other than the CFTC) may require disclosure under Form 7-R or Form 8-R Disciplinary Information-Regulatory Disclosure Question G (and Question H if still in effect). NFA's Registration Investigations staff is available at (312) 781-1410 or (800) 621-3570 if you've read the Disciplinary Information-Regulatory Disclosure questions and you are not sure whether a regulatory action requires disclosure.

For the definition of SRO and investment-related statutes, see the Definition of Terms in the Form 7-R or Form 8-R.

If an individual fails to pay an arbitration award and any component of the unpaid award involves a CFTC-regulated product, disclosure is required under Form 8-R, Disciplinary Information-Financial Disclosures, Question J regardless of where the case was heard. Otherwise, pending, adjudicated, settled or dismissed arbitration matters do not need to be disclosed.

Unpaid reparations awards require disclosure under Form 8-R, Disciplinary Information-Financial Disclosures, Question J. Otherwise, pending, adjudicated, settled or dismissed reparations matters do not need to be disclosed.

Disclosure of a bankruptcy matter is required only if a U.S. bankruptcy trustee filed an adversary action against you. For those cases, you should provide NFA with a copy of the complaint and the final disposition of each matter. 

For a definition of adversary action, visit the Definition of Terms in the Form 7-R or Form 8-R.

Yes. Disciplinary information must be disclosed on both the Form 7-R and Form 8-R. However, a sole proprietor only files Individual DMPs for his/her Form 7-R and Form 8-R disclosures.