Q: I’m confused as to when I should list something on my U4 in Section 12 (Employment History) and when should it be listed in Section 13 (Other Business). Or should my outside business activities be listed in both places?
A: As noted in the instructions to the FINRA Form U4, Section 12 requires you to provide your employment history for the past 10 years. You cannot have any gaps that are more than three months in length. If you do have a longer gap, you should indicate your status during that period.
For example, you can list things like “unemployed,” “extended travel,” “full-time student” or “self-employed” as appropriate. The employment information required in Section 12 includes your current employment, which should also be reported in Section 1.
Section 12 also requires you to report employment with both unaffiliated and affiliated firms, which should be listed in Sections 3 and 6, respectively. Section 13 (titled “Other Business”) is often referred to as Outside Business Activities or OBAs. This section requires disclosure of any business that you are “currently engaged in” as a “proprietor, partner, officer, director, employee, trustee, agent or otherwise.”
In most cases, we would expect to see your OBA reported in Section 12 as well since it’s likely to be reported in Section 3. In most cases, we would assume that your “outside business” is not affiliated with your current employer.
For example, you may sell insurance products (with the approval of your broker-dealer, of course). That business activity would not be considered as “affiliated” with the brokerage firm.
Item 13 also does not require you to disclose non-investment-related activity that is "exclusively“ charitable, civic, religious or fraternal, and is recognized as tax-exempt.”
So, for example, coaching a youth sports league or volunteering on the board of your homeowner’s association would typically not have to be reported here.
However, keep in mind potential conflicts of interest that could arise from such activities, which would need disclosure.
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