The U.S. Financial Industry Regulatory Authority is seeking comment on proposed rule amendments that would require firms to report allegations of sales practice violations against an individual broker made in arbitration claims or civil lawsuits that do not name the broker as a respondent or defendant.

Under current practice, firms are required to report customer allegations against a broker in an arbitration claim or civil litigation complaint only if the legal document specifically names the broker as a respondent. A settlement or ruling resolving the allegations also don’t need to be reported if the broker is not named as a respondent.

FINRA reports that in recent years claimants have been naming only the firm in arbitrations and lawsuits to bolster their ability to settle their disputes more easily prior to hearing or to litigate if they do not settle. As a result, neither the allegations of sales practice violations made against the unnamed brokers nor the dispositions of those proceedings are reported; so, that important information is unavailable to regulators, to prospective broker-dealer employers and to the investing public.

However, if an investor were to make the same allegations against a broker in a written complaint to the firm, the firm and the broker are required under FINRA rules to report the complaint within 30 days – and the information would be available to regulators and to the public. FINRA’s proposed rule amendments are aimed at eliminating the inconsistency regarding the reporting of alleged sales practice violations by brokers.

FINRA is also proposing to raise the threshold for complaints and settlements that must be reported from US$10,000 to US$15,000.

The deadline for comments on the proposals is May 27.