Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Wednesday, January 26, 2011

SEC Releases Staff Study on Improved Investor Access to Information about Brokers and Advisers

The SEC released its third staff study this week required by Dodd-Frank, the Study and Recommendations on Improved Investor Access to Registration Information About Investment Advisers and Broker-Dealers.  Section 919B directs the SEC to complete a study, including recommendations, of ways to improve the access of investors to registration information about registered and previously registered investment advisers, associated persons of investment advisers, brokers and dealers and their associated persons, and to identify additional information that should be made publicly available. The Act specifies that the study include an analysis of the advantages and disadvantages of further centralizing access to registration information, and identify data pertinent to investors and the method and format for displaying and publishing the data to enhance the information’s accessibility and utility to investors. Unlike the "fiduciary duty" study for investment advisers and broker-dealers, Dodd-Frank requires the SEC to implement any recommendations within eighteen months after completion of the study.

The study contains an overview of the registration information the Staff believes is important to investors, as well as a brief introduction to the primary sources of publicly available registration information. It first discusses broker-dealer registration and disclosure, then discusses investment adviser registration and disclosure, and finally compares the nature of information available in BrokerCheck and IAPD.

The study proposes several recommendations:

 For the near-term, i.e., within the eighteen-month implementation period, the Staff makes the following recommendations: (1) unify search returns for BrokerCheck and IAPD to help investors more easily obtain the data they need to make informed decisions regarding financial services providers; (2) add a search by ZIP code or other indicator of location to BrokerCheck and IAPD to increase the utility of the existing databases; and (3) enhance BrokerCheck and IAPD by adding educational content to make the data currently available more useful to investors.

The Staff also recommends that, subsequent to the eighteen-month implementation period, Commission staff and FINRA continue to analyze, including through investor testing, the
feasibility and advisability of expanding BrokerCheck to include information currently available in CRD, as well as the method and format of publishing that information; and that Commission staff continue to evaluate expanding IAPD content and the method and format of publishing that content, including through investor testing.

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