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FINRA to Brokers – Time to (Further) Open Up the Kimono

Published July 22, 2010

Financial Industry Regulatory Authority (FINRA) has announced that it is expanding its free, online service, BrokerCheck, to reveal additional and more detailed information concerning brokers and brokerage firms.

Changes being made to BrokerCheck include the following:

•           All historic complaints dating back to 1999 for individual brokers who are currently registered or whose registrations were terminated within the preceding 10 years will be listed.  Generally, historic complaints are defined as “customer complaints, arbitrations or litigations more than two years old that have not been adjudicated or have been settled for an amount less than the reporting requirement (currently $15,000).”

•           The expanded BrokerCheck will make a former broker’s record public for 10 years, so investors can access information about individuals who may work in other sectors of the financial services industry or who have attained other positions of trust.

•           Additional information that has been reported to FINRA since 1999 will become permanently available – including reportable criminal convictions or pleas of guilty or nolo contendere; civil injunctions or findings of involvement in a violation of any investment-related statute or regulation; and arbitration awards or civil judgments based on the individual’s involvement in alleged sales practice violations.

•           Brokers will be able to submit a written notice of the dispute to FINRA – FINRA will post the appropriate form on its website – with all available supporting documentation. If FINRA determines that the dispute is eligible for investigation, it will add a general notation to the broker’s BrokerCheck report, stating that the broker is disputing certain information in the report, and that notation will only be removed when FINRA has resolved the dispute. If its investigation shows the information is, in fact, inaccurate, FINRA will update, modify, or remove that information as appropriate.

•           All of these changes will be implemented by the end of the year.  The BrokerCheck expansion will be implemented in two phases. In late August, historic complaints will be added to the public records of all current and former brokers. By the end of the year, full records will be publicly available for all brokers whose registrations have terminated within the last 10 years. Also by the end of the year, the additional information that will be permanently available will be added to the records of the appropriate former brokers, and the formal dispute process will be fully in place.
Full details on BrokerCheck’s upcoming expansion will be available in a FINRA Regulatory Notice to be published in the near future.

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