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FINRA BrokerCheck- New Rules Coming?
FINRA BrokerCheck- New Rules Coming?
02.25.2014At its recent board meeting, the Financial Industry
Regulatory Authority (FINRA) discussed a number of proposed rules, including
one that would essentially increase visibility for BrokerCheck on firm websites
and communications.
BrokerCheck is a free online database containing investment
professional or firm information, including a broker’s disciplinary history.
FINRA summarizes the proposed rule on its website, explaining it would “require
firms to include a readily apparent reference and link to BrokerCheck on any
member firm's website that is available to retail investors.” Additionally, the
rule would require a reference and link to BrokerCheck in online retail
communications, subject to specific conditions.
Reportedly, the intentions behind this proposed rule is to
protect retail investors. However, the question remains: How will this affect
brokers and their retail customers? Is this a move towards more accurate
reporting and better transparency for customers or a well-intentioned reporting
method that doesn’t “paint the whole picture” of a financial advisor’s history?
Some say that BrokerCheck can be misleading to customers, as
incidents are recorded that may have been dismissed, or are simply meritless
customer complaints. Others say that investors have the right to be informed of
an advisor’s full history and qualifications and that resources like
BrokerCheck are a method to provide this needed information. Additionally,
there is the view that this rule could be too costly to implement and monitor.
For instance, verifying the proper posting of BrokerCheck links to firm
websites may prove to be cumbersome and an increase in visibility to this
resource could increase advisor requests to expunge or update records.
Whether you are a FINRA member or a retail investor, this is
a conversation worth following. While accurate and transparent information
between brokers and their customers is something most agree upon, the methods
and costs of regulating and disseminating this information continues to be up
for discussion.
Stay tuned to find out more about FINRA’s proposed rules and
how they could affect the financial community.
All information provided in this blog is for informational
purposes only. The sources used are presumed accurate. CalSurance Associates,
Brown & Brown Program Insurance Services, Inc. and Brown & Brown, Inc.
will not be liable for any errors, omissions, losses, injuries or damages
arising from its display or use and will not assume responsibility for any misguided
information. No guarantees are implied.
Written by
CalSurance Team
Published February 2014
