The Financial Industry Regulatory Authority, Inc. (FINRA) retracted a rule, proposed this year, requiring brokers to display a URL on their websites and on social media profiles linking directly to their background profiles on the online FINRA-based database BrokerCheck. BrokerCheck is a free search tool provided through the FINRA website which "help[s] investors research the professional backgrounds of current and former FINRA-registered brokerage firms and brokers, as well as investment adviser firms and representatives." Brokers are currently required to provide the BrokerCheck website homepage and hotline number in writing to their clients, but the FINRA rule would have amended that action to feature a direct link to a broker's BrokerCheck profile on a firm's website and social media sources.
A range of brokers and organizations like Wells Fargo Advisors (WFA), LLC and Financial Services Institute (FSI) Inc. were opposed to the rule, arguing that it was "too broad and lacked clarity" and did not fully consider the areas of the Internet that the rule sought to cover. This is especially true, FSI contends, in terms of social media, where sites like Twitter, Facebook and LinkedIn have limitations on the space allowable for writing profile descriptions. WFA added further to this criticism by stating that the rule's broad brush on Internet citations of BrokerCheck should be narrowed to only a firm's website, leaving out complications inherent to the mediums of social media and other profile-based websites featuring a firm's information.
While FINRA's aim with this rule is to provide greater exposure of firm and broker history to investors, the apparent retraction of this proposal shows that this issue may require more definition and limitations in possible future iterations. For more information, or for assistance on other compliance topics, please contact us at (619) 278-0020, or email us at firstname.lastname@example.org.