Friday, April 27, 2012

NASAA Urges FINRA to Expand BrokerCheck Disclosures

The North American Securities Administrators Association (NASAA) has urged FINRA to expand the scope of information provided on BrokerCheck, FINRA's online tool to help investors check the professional background of securities firms and brokers. In a comment letter today regarding FINRA Regulatory Notice 12-10, NASAA noted that a gap exists between the information that is provided in BrokerCheck reports and the snapshot reports from the Central Registration Depository (CRD) that are provided to the investing public by state securities regulators.

NASAA believes that reports generated from the BrokerCheck system should include all of the information that a CRD snapshot would provide, absent a compelling reason to do otherwise. For example, NASAA believes that BrokerCheck reports should include such information concerning a broker’s educational background, continuing education history, and CRD/IARD filing history, as well as the reason for and comments related to a broker’s termination. Additionally, NASAA believes that FINRA should discontinue the practice of placing time limits on disclosure, such as the 10-year limit on the inclusion of bankruptcies in BrokerCheck reports.

NASAA also recommended that, where an associated person or firm has been involved in an arbitration involving an allegation of a sales practice violation, BrokerCheck include a link to statements of claim, answers, and the final decision, regardless of whether a complainant has received a favorable ruling. NASAA observed that similar information involving civil litigation is publicly available in courthouses across the country. Although BrokerCheck does currently provide a link to arbitration awards, access is limited to final awards against associated persons.

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