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FINRA Proposes Expansion of Information Publicly Available Through BrokerCheck

David P. Meyer, Esq.

The Financial Industry Regulatory Authority (FINRA) has submitted a proposal to the Securities and Exchange Commission (SEC) to amend FINRA Rule 8312 (FINRA BrokerCheck Disclosure) to expand the amount of information, both in terms of scope and time, available throughBrokerCheck.

Such an expansion of disclosures will help provide greater protection for investors and those that deal with registered representatives (and former registered representatives). FINRA hopes the proposed rule changes will make BrokerCheck a more valuable resource in helping “combat fraud across the financial services sector.”

Specifically, the proposed rule change would first expand the BrokerCheck disclosure period for former associated persons of a member to ten years from two years.

Second, FINRA has proposed to permanently make available information about former registered representatives. Such information consists of:

(i) Where the person was convicted of or pled guilty or “no contest” to a crime;
(ii) Where the person was the subject of a civil injunction in connection with investment-related activity, or a civil court finding of involvement in a violation of any investment-related statute or regulation; or
(iii) Where the person was named as a respondent or defendant in an investment-related, consumer-initiated arbitration or civil litigation which alleged that the person was involved in a sales practice violation and which resulted in an arbitration award or civil judgment against the person.

Finally, the proposal would make publicly available all historic customer complaints that were archived after August 16, 1999.

Click here to read the text of the proposed rule change.

BrokerCheck was initial established by FINRA in 1988 and has undergone significant reforms over the years. BrokerCheck is a free tool to assist investors in researching the professional backgrounds of current and former FINRA-registered brokerage firms and their registered representatives. Investors should always investigate the background of their broker or brokerage firm when deciding whether to do business with (or continue to do business with) them.