Finra floats revised BrokerCheck link proposal

Plan addresses firms' objections to creating thousands of individual links to profiles

May 1, 2014 @ 11:07 am

By Mark Schoeff Jr.

Finra again is floating a proposal that would require brokerage firms to put links on their websites and embed them within online profiles of their registered representatives to lead investors to BrokerCheck.

The rule was first proposed in January 2013 but withdrawn after industry criticism about its feasibility. Firms raised concerns about including links on social media pages, such as Twitter and Facebook. They also resisted having the link go directly to a firm's and broker's profile on BrokerCheck, the database containing information about the reps' business and disciplinary background.

The modified proposal does not require a link to BrokerCheck in a message posted on an online forum such as Twitter. It also permits a link to the BrokerCheck home page rather than a “deep link” to summary profile pages.

“Finra believes that the revised approach will increase investor awareness of BrokerCheck, while addressing the operational concerns the initial proposal raised,” the Financial Industry Regulatory Authority Inc. said in a notice released Wednesday.

Under the rule, which will be open for comment until June 16, a brokerage firm must “include a readily apparent reference and hyperlink to BrokerCheck on all websites available to retail investors.” BrokerCheck links also must be made available “in online communications with the public that include a professional profile of, or contact information for, an associated person.”

The rule would not pertain to e-mail, text messages or retail communication posted on a Twitter feed, chat room or on a message board. The rule also would not apply to third-party websites unless firms or their brokers “have adopted or become entangled with the communication,” the regulatory notice states.

A link to BrokerCheck or to the firm's website where a BrokerCheck link is provided should be posted in the “About” sections of profile pages on Twitter, Facebook, YouTube and Pinterest and in the “Background Summary” section of LinkedIn, according to the regulatory notice.

Finra's tweaking of the original proposal has been met with initial support.

“It appears they've engaged in a thoughtful process that on first blush resulted in what appears to be a workable solution to some of the issues that were raised,” said Mark Knoll, a partner at Bressler Amery & Ross. “The dialogue with Finra has been very productive.”

Mr. Knoll helped draft the comment letter that the Securities Industry and Financial Markets Association submitted on the first BrokerCheck link proposal.

SIFMA declined to comment on the revised proposal, which it is reviewing.

Removing the requirement for links to BrokerCheck summary pages should sit well with big firms that would have faced the prospect of constructing thousands of unique links on their websites, according to Patrick Mahoney, owner of an eponymous law firm.

“It accomplishes the same thing without requiring firms to take all these steps to embed individual links,” he said. “I think Finra's done a pretty good job of assuaging the firms' major concerns.”

But the revised proposal likely also will draw many comment letters criticizing portions of it. For instance, there may be calls for refinement of the directive surrounding third-party websites.

“That 'entanglement' language is a little bit vague,” Mr. Mahoney said. “That's going to need a little more clarity.”

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