Finra moves ahead with BrokerCheck, arbitration and expungement efforts

At meeting, regulator also focuses on temporary cease-and-desist orders, expedited proceedings

Feb 13, 2014 @ 12:47 pm

By Caitlin Mollison

finra, brokercheck, arbitration, expungement, regulation, ketchum
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Finra chief Rick Ketchum (Bloomberg News)

At its board meeting Thursday, the Financial Industry Regulatory Authority Inc.'s board of governors discussed several rule proposals related to its BrokerCheck database, the definition of arbitrators and expungement issues, the regulator said in a notification posted on its website.

The board authorized Finra to seek comment in a regulatory notice on a revised proposal to amend the regulator's Rule 2210 (communications with the public) to require firms to include a readily apparent reference and link to BrokerCheck on any member firm's website that is available to retail investors.

The board also authorized Finra to file with the Securities and Exchange Commission proposed amendments to the customer and industry codes of arbitration procedure to refine and reorganize the definitions of “nonpublic” and “public” arbitrator.

In addition, the board authorized Finra to file with the SEC the proposed Rule 2081, which prohibited conditions relating to expungement of customer dispute information.

The proposal would “prohibit firms and associated persons from conditioning or seeking to condition settlement of a dispute with a customer on, or otherwise compensating the customer for, the customer's agreement to consent to, or not to oppose, the firm's or associated person's request to expunge the customer dispute information from Finra's Central Registration Depository system,” according to the regulator's notification on its site.

Finally, the board authorized Finra to file with the SEC proposed amendments to Rule Series 9800 (temporary cease and desist orders), Rule Series 9550 (expedited proceedings) and related rules in the Code of Procedure.

The proposed amendments “would (1) amend the evidentiary standard for issuing a temporary cease-and-desist order; (2) reduce administrative burdens in TCDO proceedings; (3) adopt an expedited proceeding to address failures to comply with a TCDO or permanent cease-and-desist order; and (4) harmonize the rules governing service of documents in TCDO proceedings and expedited proceedings,” according to Finra's notification on its site.

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