FINRA Revives BrokerCheck Proposal

At the Financial Industry Regulatory Authority (“FINRA”) Board of Governors meeting held February 13, 2014, a previously withdrawn rule change proposal was revived that would require brokerage firms to incorporate a link to “BrokerCheck” on their public websites and any other type of communication that includes contact information or the professional profile of an associated person. The proposed rule would not apply to emails or text messages.

BrokerCheck provides the investing public access to information about brokers, including disciplinary history, client complaints, as well as arbitration and legal decisions regarding the firm’s investment business. Current rules require brokerage firms to provide investors, annually and in writing, the BrokerCheck hotline number as well as the FINRA website address.

FINRA originally proposed this rule in early 2013 but withdrew it due to significant industry pushback. The new proposal is now open for public comment. Specifically, the FINRA web site states:

“The Board authorized FINRA to seek comment in a Regulatory Notice on a revised proposal to amend FINRA Rule 2210 (Communications With the Public) to require firms to include a readily apparent reference and link to BrokerCheck on any member firm's website that is available to retail investors. In addition, the proposal would require a firm to include a readily apparent reference and link to BrokerCheck in any online retail communication that includes a professional profile of, or contact information for, an associated person, subject to specified conditions. The proposal would not apply to (1) electronic mail or text messages; (2) a retail communication that is posted on an online interactive electronic forum (such as a message board, Twitter feed or chat room); (3) a member firm that does not provide products or services to retail investors; or (4) a directory or list of associated persons limited to names and contact information.”

Advocates for the investing public support the rule change based on the premise that investors should be knowledgeable and informed regarding who they are investing with. Those in opposition fear that this requirement will impede a financial professional’s ability to clarify any potential erroneous disclosures.

For further information on this and other related subjects, please contact us at info@corecls.com or (619) 278-0020.