There are a number of different licenses or registrations that those working in the financial services industry may hold. Most of these can be challenging to earn, requiring professionals to meet educational requirements and pass one or more exams depending on the credential. Each license or registration also has its own obligations and expectations for the kinds of conduct that can result in discipline. In most cases, however, when a professional who holds one or more financial industry credentials files for personal bankruptcy, the filing alone is unlikely to affect the status of any license or registration they hold.

That said, if you are a licensed or registered financial professional, it's important to understand before you file for bankruptcy protection what the consequences of that filing might be for your credentials. The Lento Law Firm's Professional License Defense Team can review your situation with you and help you make sure you don't make any missteps in the bankruptcy process or fail to meet any reporting requirements that your credential imposes on you in the event of a bankruptcy filing. Call us today at 888.535.3686 or use our contact form to schedule a confidential consultation to learn more about how we can help.

Financial Services Licenses

There are many different credentials that a financial professional may earn, and they may be required depending on the type of work that the professional does. Some are issued by the Financial Industry Regulatory Authority (FINRA), a not-for-profit, self-regulatory organization that administers a broad range of exams for financial industry professionals and issues registrations that qualify the professionals to engage in various types of work in finance.

Others are issued by the individual states. These include licenses for Certified Public Accountants, Mortgage Brokers, Mortgage Bankers, and other mortgage professionals.

Each license or registration comes with its own requirements and ongoing obligations. Whether it's FINRA or a state licensing authority, each entity that issues financial services industry credentials will accept and investigate misconduct complaints about licensed professionals and, where appropriate, discipline professionals who fail to meet standards.

Bankruptcy

Bankruptcy is governed by federal law. It is a process that allows a debtor to “start fresh” and to shed burdensome debt requirements – provided certain conditions are met. For example, the debtor must fully disclose not only their liabilities but also their assets, income, and expenses. Failure to do so can result in allegations of bankruptcy fraud, which is a crime that can be punished by up to 5 years in prison and fines of up to $250,000.

The federal Bankruptcy Code prohibits a “governmental unit” from revoking or suspending a license simply because a debtor has filed for bankruptcy protection. This protects state-issued licenses from termination or suspension based simply on the fact that the licensed professional filed for bankruptcy.

FINRA, on the other hand, is a not-for-profit entity that is not directly connected with the federal or state government. While FINRA may ask for information about prior or present bankruptcies when an individual applies for a particular type of securities industry registration, as a practical matter, it will not discipline a registrant based solely on the fact that the person has filed a bankruptcy petition or has been declared bankrupt.

That said, both individual states and FINRA may investigate licensed financial professionals if there are facts that suggest that the professional has violated licensing or registration standards or has broken the law. It's very important that any licensed financial professional who files a petition for bankruptcy is extremely careful to fully disclose all information required by the court and participate in the proceedings in good faith. Failure to do so can lead to a disciplinary investigation and consequences that can put the professional's license at risk.

The Lento Law Firm's Professional License Defense Team Can Help

You have worked hard to earn your financial industry license or registration. If you have filed for bankruptcy protection, your credentials may be one of your most important assets as you emerge from the bankruptcy process. It's important that you understand what you are required to do to maintain your license or registration throughout your bankruptcy and that you do not take any steps during the process that will put your future at risk.

The experienced attorneys from the Lento Law Firm's Professional License Defense Team understand what you need to do to maintain your financial industry credentials when you are involved in a personal bankruptcy. We regularly defend individuals facing investigations or disciplinary proceedings that relate to their professional licenses or credentials. We can advise you as to what steps you need to take while your bankruptcy case is active, and if you're investigated because of allegations of misconduct – whether they relate to your bankruptcy filing or not – we are ready to protect your rights and defend you against the allegations.

Call us today at 888.535.3686 or complete our contact form, and we will reach out to you to schedule a confidential consultation. Your financial industry credential is one of your most valuable assets – let the Lento Law Firm help you protect it!