Finra sends BrokerCheck link rule to SEC

Rule would require brokerage firms to include links from their websites to a public database containing information on brokers' backgrounds

May 28, 2015 @ 12:42 pm

By Mark Schoeff Jr.

Finra has advanced a rule that would require brokerage firms to include links from their websites to a public database containing background information on their brokers.

The Financial Industry Regulatory Authority Inc. filed the proposed rule change Wednesday with the Securities and Exchange Commission.

Under the measure, a brokerage would have to include a link to BrokerCheck on a homepage that is initially viewed by retail investors. It also would have to include links to the database on profile pages of individual brokers.

The SEC must approve the rule before it goes into effect, but it's not clear when the agency will act. The SEC may also ask for comments.

Finra first filed the rule with the SEC in January 2013 but withdrew it after the financial industry raised concerns about its feasibility.

The original measure would have required that BrokerCheck links be included in posts on social media sites, such as Twitter. It also would have made brokers use a “deep link” to the BrokerCheck profile page of a registered representative.

The revised rule does not apply to social media sites, and the BrokerCheck links only have to go to the site's homepage rather than to individual profiles.

“Finra believes that by limiting the application of the proposal only to a member's own websites, the revised proposal significantly reduces these implementation costs for members, while maintaining the proposal's investor protection goals,” Finra stated in the filing notice.

One group that opposed the original rule, the Financial Services Institute, said Finra got this iteration right.

“The rule, as revised, addresses the concerns with the original proposal without impacting the investor protection benefits of the proposed rule,” Robin Traxler, FSI vice president for regulatory affairs, said in a statement. "Once again this demonstrates how essential the comment process is, and we applaud Finra for responding to commenters' concerns.”

The measure is designed to increase traffic to BrokerCheck, a database that contains background information on brokers, including their disciplinary history.

“The proposed rule change will help increase investor awareness and make it easier for investors to find BrokerCheck by requiring reference and hyperlinks to BrokerCheck on member websites,” Finra stated. “BrokerCheck serves as a critical source of information for investors, and [Finra] considers BrokerCheck to be among the first resources they should turn to when choosing whether to do business with a particular firm or registered person.”


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