The Open Book
The old saying "play by the rules," takes on new meaning in the compliance world as brokers are under more and more scrutiny by regulators and the public. Now the Securities and Exchange Commission has given the Financial Industry Regulatory Authority (FINRA) the go-ahead to provide more information about both former and current brokers on its BrokerCheck® service. A Regulatory Notice is expected in the near future on this development.
FINRA has announced that the expanded information will roll out in phases. In late August, we will see the addition of historic complaints for all current and former brokers. Later in 2010, the records of all brokers terminated in the past 10 years will be on the service.
Some of the major additions include more information about customer complaints, extension of records disclosure from two years to 10 years for brokers leaving the industry, permanent information on criminal convictions and other proceedings such as arbitration awards and injunctive relief.
More specific information on what the BrokerCheck® expansion will include can be viewed here. Briefly summarized, it includes the following.
Expanded Historic Complaint Disclosure
Expect expanded disclosure of what are known as "historic" complaints that were over two years old, were not resolved through adjudication or were settled for less than the required reporting amount, now set at $15,000. Previously, these events were disclosed on the service after a broker had three or more such events. The expansion will now include all historic complaints from 1999 forward for current brokers and those brokers whose registrations terminated in the prior 10 years.
Expanded Disclosure for Former Brokers
The expansion of disclosed information will reach back 10 years for those brokers who have left the securities industry. The current period is only two years, which FINRA notes aligns with its jurisdiction over former brokers and the time-frame in which an individual can continue broker activities without requalifying.
Expanded Permanent Information on Former Brokers
The new BrokerCheck expansion will include permanent information about brokers who have been subject to final regulatory action. It will also include additional information such as criminal convictions, guilty or nolo contendere pleas, injunctive relief related to regulatory violations and arbitration or civil judgments relating to "alleged sales practice violations."
Dispute Process Available
Brokers will have the opportunity to dispute accuracy of information included in the BrokerCheck service through a formalized process. This will include a notation of disputed information after a broker has filed a written notice to FINRA and will remain posted as such until resolved after FINRA investigation.
The Securities Lawyer Blog urges brokers to stay posted with us on the developments with regard to expanded BrokerCheck.
Resources
For any questions or concerns on the expansion of BrokerCheck® disclosures, please contact Gusrae Kaplan Nusbaum PLLC. We can provide support and guidance for brokers to ensure that their BrokerCheck® disclosures are accurate and when they are not accurate, follow the procedures for disputing their accuracy.
