Securities Law Prof Blog

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

Tuesday, November 17, 2009

SEC Approves Major Expansion of BrokerCheck Disclosure

FINRA announced that the SEC has approved  a major expansion of its BrokerCheck service — to make records of final regulatory actions against brokers permanently available to the public, regardless of whether they continue to be employed in the securities industry. Under current rules, a broker's record generally becomes unavailable to the public two years after he or she leaves the securities industry and is therefore no longer under FINRA's jurisdiction.  Disclosure records for former brokers will be available on BrokerCheck beginning November 30.

"It is possible that a (former broker) could become a financial planner or work in another related field where his securities record would help members of the public decide if they should accept his financial advice or rely on his advice or expertise," the SEC said in its order approving the BrokerCheck expansion. It added that providing information on final regulatory actions against former brokers "will help members of the public to protect themselves from unscrupulous people and thus….should help prevent fraudulent and manipulative acts and practices, and protect investors and the public interest."

 BrokerCheck is a free online service through which investors can instantly see the employment, qualifications and disciplinary history of more than 650,000 brokers under FINRA's jurisdiction. FINRA estimates there are more than 15,000 individuals who have left the securities industry after being the subject of a final regulatory action and whose disciplinary history is not currently available on BrokerCheck.

 Records for those individuals will become available on November 30 and will include any final sanction (such as bars, suspensions and fines) imposed by the SEC, the Commodity Futures Trading Commission, any federal banking agency, the National Credit Union Administration, any other federal regulatory agency, any state regulatory agency, any foreign financial regulatory authority or any self-regulatory organization (such as FINRA). Those individuals' records generally will also disclose administrative information such as employment and registration history, the individual's most recently submitted comments and the dates and names of qualification examinations passed by the individual.

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