Finra seeking comments on BrokerCheck enhancements

The Financial Industry Regulatory Authority Inc. is looking for input on how it can increase investor use of its BrokerCheck system.

The Financial Industry Regulatory Authority Inc. is looking for input on how it can increase investor use of its BrokerCheck system.
The summary of the request, which can be found here, specifically states that the regulator is seeking suggestions on “potential changes to the information disclosed through BrokerCheck, the format in which the information is presented and strategies to increase investor awareness of BrokerCheck.”

Of particular note, Finra is considering giving up its proprietary lock on BrokerCheck data, and providing access to its disciplinary and licensing data to private vendors.
That’s something the SRO has never done. Finra has carefully guarded the data, limiting its use to investors and one-off data requests.
With wholesale access to the data, though, commercial users could more easily create industywide comparison data, like Brightscope Inc. has begun with an adviser-rating site .
Having better comparison data might help otherwise good brokers with a few black marks, said Edward Siedle, founder of Benchmark Financial Services Inc., who investigates advisers for institutional investors.
“If you’ve been in business 30 years and been sued three times, where do you fall on the risk curve?” he asked. That many complaints for a veteran may be quite normal.
In addition, firm-level complaint data could also be revealed for the first time if Finra opened up BrokerCheck.
Currently, the database does not disclose pending customer complaints against a firm—only completed arbitrations and regulatory actions. But individual brokers do report pending complaints.
With a full data set, though, outside vendors could aggregate data about individual brokers at a particular firm and report it at the firm level.
Separately, Finra has recently begun to put more information online in its Disciplinary Actions Online database, which provides access to Finra complaints against firms and individual brokers, settlement agreements (known as Letters of Acceptance Waivers and Consent, or AWCs), decisions by Finra hearing panels and National Adjudicatory Council decisions. (See: ‘Finra beefs up online disclosures of brokers’ disciplinary info’.)