The Securities Lawyer Blog recently posted on FINRA's proposed amendments to Rule 8321 which will make significant changes to the BrokerCheck® service. The Securities and Exchange Commission has now approved the proposed amendments to the rule. Regulatory Notice 10-34 can be read in its entirety by clicking here.
It is important that all brokers and firms review these new provisions carefully and circulate RN 10-34 widely as suggested in the notice itself.
Briefly summarized, the enhanced BrokerCheck will include historic customer complaints, permanent information about various civil and criminal proceedings involving brokers, increase from two years to 10 years the broker disclosure period for former associated persons of member firms and provide codification of the current process for brokers to dispute the accuracy of, or to update, information on BrokerCheck.
RN 10-34 contains important background to the revised BrokerCheck service in each area that has been amended. A summary of two of these areas follows.
Historic Complaints
Prior to the amendments, customer complaints were limited in scope. Certain conditions needed to be met before such a complaint was included on BrokerCheck. The new rule will allow those conditions to be eliminated and this will take effect on August 23, 2010. The practical effect of this amendment is that all Historic Complaints that became non-reportable after Web CRD (stated as on or after August 16, 1999) will now be displayed on the service.
Along with these changes to Historic Complaint content, member firms will be permitted to amend Historic Complaints without first contacting FINRA. This change aligns with the way member firm's are able to amend "other reported disclosure events."
Disclosure Period Expands and Information Becomes Permanent
BrokerCheck now includes information for current and former member firms, and certain associated persons for two years post-registration. It also includes permanent information about former associated persons of a member firm who were subject to final regulatory action.
Under the expanded BrokerCheck, and beginning on November 6, 2010, the disclosure period will increase from two to 10 years and in certain circumstances information will be permanently included. In addition to final regulatory action, other circumstances that trigger the permanent disclosure include criminal convictions, guilty or nolo contendere pleas, injunctive relief related to regulatory violations and arbitration or civil judgments relating to "alleged sales practice violations."
Next week's post will include more information about the BrokerCheck dispute process which is impacted by the Regulatory Notice.
If you have any questions or concerns about this or any other FINRA matter, please contact the Wall Street law firm of Gusrae Kaplan Nusbaum PLLC.
