FINRA said it has won approval from the Securities and Exchange Commission for a “major expansion” of its BrokerCheck service, which would allow it to make records of final regulatory actions against brokers permanently available to the public, regardless of whether they continue to be employed in the securities industry.
Under current rules, a broker’s record generally becomes unavailable to the public two years after he or she leaves the securities industry and is therefore no longer under FINRA’s jurisdiction. The SRO estimates there are more than 15,000 individuals who have left the securities industry after being the subject of a final regulatory action and whose disciplinary history is not currently available on BrokerCheck.
The records for those individuals will become available on November 30 and will include any final sanction (such as bars, suspensions and fines) imposed by the SEC, the Commodity Futures Trading Commission, any federal banking agency, the National Credit Union Administration, any other federal regulatory agency, any state regulatory agency, any foreign financial regulatory authority or any SRO.
“It is possible that a (former broker) could become a financial planner or work in another related field where his securities record would help members of the public decide if they should accept his financial advice or rely on his advice or expertise,” the SEC said in its order approving the expansion, and it suggested that providing information on final regulatory actions against former brokers will improve investor protection.
“This is an important step for investors and for investor protection,” said FINRA chairman and CEO, Richard Ketchum. “Individuals previously barred by FINRA and other regulators have surfaced in a number of recent frauds in other parts of the financial industry that cost unsuspecting investors millions of dollars. It has never been more critical for investors to research the backgrounds of the financial professionals they deal with than it is today.”
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FINRA to permanently disclose disciplinary actions against former brokers
SEC approves expansion of BrokerCheck service
- By: James Langton
- November 17, 2009 November 17, 2009
- 16:45