According to FINRA, Michael Ramon DeLao was fined $2,500 and suspended from association with any FINRA member in all capacities for three months on August 8, 2023. In consideration of a sanction already levied by DeLao's member firm, FINRA made a corresponding reduction to the fine it imposed. The suspension was in effect from September 5, 2023, through December 4, 2023.

FINRA found that DeLao failed to timely amend his Uniform Application for Securities Industry Registration or Transfer (Form U4) to disclose that he had been charged with, and subsequently been found guilty of, a felony. DeLao was charged in an Arizona State court with an offense deemed a felony and the court found him guilty. At that time, the court imposed conditions on DeLao that if successfully completed would lead the court to ultimately reclassify the offense as a misdemeanor, which the court later did.

Prior to the reclassification, the offense to which DeLao pleaded guilty was considered a felony offense for all purposes under Arizona law. As a result, DeLao was required to disclose that he was charged with a felony offense within 30 days of being charged and that he had been found guilty of that offense within no more than 10 days of the court's entry of judgment against him. However, DeLao failed to make any such disclosure until years later.

In addition, DeLao falsely stated on annual compliance questionnaires that he had no arrests that had not been disclosed to the firm.

Form U4 is a critical document in the securities industry. It contains information about a registered person's background, qualifications, and disciplinary history. This information is made available to the public through FINRA's BrokerCheck system, which allows investors to research the background of their financial professionals before deciding to work with them.

Registered representatives are required to keep their Form U4 accurate and current by amending it promptly when certain events occur, including criminal charges and convictions. These disclosure requirements exist to ensure that investors and regulators have current information about registered persons' backgrounds and can make informed decisions about their trustworthiness and fitness to work in the securities industry.

DeLao's failure to disclose the felony charge and conviction for years deprived investors and regulators of important information about his background. Even though the offense was later reclassified as a misdemeanor, at the time it occurred it was a felony and required immediate disclosure.

DeLao's false statements on annual compliance questionnaires compound his violation. These questionnaires are important tools that firms use to monitor whether their representatives have properly updated their Form U4s. By providing false answers, DeLao prevented his firm from discovering and correcting the Form U4 deficiency.

Investors should always check FINRA's BrokerCheck before working with a financial professional to review their background and disciplinary history.