Former brokers with disciplinary records are going to find it harder to cover their tracks if the
Financial Industry Regulatory Authority has its way. Today, the brokerage industry's self policing body proposed further expansion of broker information available through its free BrokerCheck service.
Under the proposal, the public would be able to access historic complaints lodged against brokers as far back as 1999. The expanded timeline would cover complaints about any broker who is currently registered or whose registrations were terminated within the past two years.
Currently, only those brokers with three or more historic complaints against them have their records on BrokerCheck. Generally, historic complaints include customer complaints, arbitrations or litigations that are two or more years old and that have been adjudicated or have been settled for less than the reporting requirement. Currently, awards under $15,000 do not have to be reported.
The Finra plan also calls for former brokers to have their records public for 10 years — up from two years — once they're out of the industry. That proposal, Finra noted in a statement, will enable investors to “access information about individuals who may work in other sectors of the financial services industry or who have attained other positions of
trust.”.
Finally, the proposal would expand the information that the public could permanently access about a broker's past records. Under Finra's scheme, such info would include criminal convictions or pleas of guilty, as well as civil injunctions and arbitration awards or civil judgments based on the former broker's involvement in an alleged sales practice violation.
The new proposals come just a few months after the Securities and Exchange Commission approved a Finra proposal to make all former brokers' records permanently available through BrokerCheck.
Previously, a broker's records were no longer available two years after the broker left a securities firm.
“At the time of the expansion last year, the SEC suggested we look at further ways to expand the scope,” said Herb Perone, a spokesman for Finra, in an interview.
All Finra proposals are subject to SEC approval.
