[Federal Register Volume 75, Number 135 (Thursday, July 15, 2010)]
[Notices]
[Pages 41254-41258]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-17190]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62476; File No. SR-FINRA-2010-012]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Order Approving a Proposed Rule Change To Amend FINRA
Rule 8312 (FINRA BrokerCheck Disclosure)
July 8, 2010.
I. Introduction
On March 30, 2010, the Financial Industry Regulatory Authority,
Inc. (``FINRA'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to amend FINRA Rule 8312 (FINRA BrokerCheck
Disclosure) to (i) expand the information released through BrokerCheck,
both in terms of scope and time; and (ii) establish a formal process to
dispute the accuracy of, or update, information disclosed through
BrokerCheck. The proposal was published for comment in the Federal
Register on April 22, 2010.\3\ The Commission received fourteen
comments on the proposal.\4\ FINRA responded to the comments on June
21, 2010.\5\ This order approves the proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 61927 (April 16,
2010), 75 FR 21064 (April 22, 2010) (SR-FINRA-2010-012)
(``Notice'').
\4\ See Exhibit A for a list of comment letters.
\5\ See letter to Elizabeth M. Murphy, Secretary, Commission,
from Richard E. Pullano, Associate Vice President and Chief Counsel,
FINRA, dated June 21, 2010 (``Response Letter'').
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II. Description of the Proposal
A. Expansion of Information Released through BrokerCheck
Pursuant to FINRA Rule 8312(b), BrokerCheck is an online
application through which the public may obtain information regarding
current and former members, associated persons and persons who were
associated with a member within the preceding two years. Historic
Complaints \6\ regarding such persons are disclosed pursuant to Rule
8312(b) only if: (i) A matter became a Historic Complaint on or after
March 19, 2007; (ii) the most recent Historic Complaint or currently
reported customer complaint, arbitration or litigation is less than ten
years old; and (iii) the person has a total of three or more currently
disclosable regulatory actions, currently reported customer complaints,
arbitrations or litigations, or Historic Complaints (subject to the
limitation that they became Historic Complaints on or after March 19,
2007), or any combination thereof (the ``three strikes provision'').\7\
In addition, pursuant to FINRA Rule 8312(c), BrokerCheck allows the
public to obtain certain limited information regarding formerly
associated persons, regardless of the time elapsed since they were
associated with a member, if they were the subject of any final
regulatory action.\8\
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\6\ Historic Complaints are customer complaints that were
reported on a uniform registration form that are more than two years
old and that have not been settled or adjudicated and customer
complaints, arbitrations, or litigations that have been settled for
an amount less than the specified dollar amount (identified on the
customer complaint question) and are therefore no longer reportable
on a uniform registration form. See FINRA Rule 8312(b)(7).
\7\ Id. In addition, if a person meets the three criteria
established for disclosing Historic Complaints, only those Historic
Complaints that became Historic Complaints after March 19, 2007 will
be displayed through BrokerCheck.
\8\ A ``final regulatory action'' includes any final action of
the Commission, Commodity Futures Trading Commission, a Federal
banking agency, the National Credit Union Administration, another
Federal regulatory agency, a State regulatory agency, a foreign
financial regulatory authority, or a self-regulatory organization,
including actions that have been appealed. See Questions 14C, 14D,
and 14E on Form U4, as well as Question 7D of Form U5. See also
Section 3(a)(39) of the Act.
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In connection with its most recent change to BrokerCheck,\9\ FINRA
stated that it would consider whether to provide greater disclosure of
information through BrokerCheck.\10\ Based on its continued evaluation
of the BrokerCheck program, FINRA proposes to (i) expand the
BrokerCheck disclosure period for formerly associated persons of a
member from two years to ten years and (ii) eliminate the conditions
that must be met before Historic Complaints will be displayed in
BrokerCheck (i.e. the three strikes provision) and, thereby, make
publicly available in BrokerCheck all Historic Complaints that were
archived after the implementation of Central Registration Depository
(``CRD[supreg]'' or ``Web CRD'') on August 16, 1999.\11\
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\9\ See Securities Exchange Act Release No. 61002 (November 13,
2009), 74 FR 61193 (November 23, 2009) (SR-FINRA-2009-050).
\10\ See letter to Elizabeth M. Murphy, Secretary, Commission,
from Richard E. Pullano, Associate Vice President and Chief Counsel,
Registration and Disclosure, FINRA, dated October 15, 2009, in
response to comments received regarding Securities Exchange Act
Release No. 60462 (August 7, 2009), 74 FR 41470 (August 17, 2009)
(SR-FINRA-2009-050); see also discussion of comments in Securities
Exchange Act Release No. 61002 (November 13, 2009), 74 FR 61193
(November 23, 2009) (SR-FINRA-2009-050).
\11\ See proposed FINRA Rule 8312(b).
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Additionally, FINRA proposes to make publicly available on a
permanent basis information regarding formerly associated persons,
regardless of the time elapsed since they were associated with a
member, if they were convicted of or pled guilty or nolo contendere to
a crime; \12\ were the subject of a civil injunction in connection with
investment-related activity or a civil court finding of involvement in
a violation of any investment-related statute or regulation; \13\ or
were named as a respondent or defendant in an investment-related,
consumer-initiated
[[Page 41255]]
arbitration or civil law suit which alleged that they were involved in
a sales practice violation and which resulted in an arbitration award
or civil judgment against the person,\14\ in each case as reported to
Web CRD on a uniform registration form.\15\ For such formerly
associated persons, FINRA proposes to disclose through BrokerCheck: (i)
Information concerning any such disclosure event(s); (ii) certain
administrative information, such as employment and registration history
as reported on a registration form; (iii) the most recently submitted
comment, if any, provided by the person, if the comment is relevant and
in accordance with the procedures established by FINRA; and (iv) dates
and names of qualification examinations passed by the formerly
associated person, if available.\16\ Disclosure pursuant to the
proposed rule change would not include other information in CRD, such
as customer complaints, historic complaints, terminations, bankruptcies
and liens. In addition, the expanded disclosure under the proposed rule
would not apply to formerly associated persons who exercised control
over an organization that was convicted of or pled guilty or nolo
contendere to a crime (Questions 14A(2) and 14B(2) on Form U4) or who
had an investment-related civil action brought against them by a State
or foreign financial regulatory authority, if the action was settled
(Question 14H(1)(c) on Form U4).
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\12\ See Questions 14A(1)(a) and 14B(1)(a) on Form U4, as well
as Questions 7C(1) and 7C(3) on Form U5.
\13\ See Questions 14H(1)(a) and 14H(1)(b) on Form U4.
\14\ See Question 14I(1)(b) on Form U4 and Question 7E(1)(b) on
Form U5.
\15\ See proposed FINRA Rule 8312(c). The proposal will apply
only to those individuals registered with FINRA on or after August
16, 1999, which is the date that Web CRD was implemented.
\16\ Id. The information would mirror the information currently
disclosed permanently with respect to any formerly registered person
who is the subject of a final regulatory action.
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B. BrokerCheck Dispute Process
FINRA also proposes to adopt paragraph (e) of Rule 8312 to codify a
process for persons to dispute the accuracy of, or update, the
information disclosed through BrokerCheck. FINRA presently has an
informal dispute process. Currently, upon the receipt of an inquiry
from a person who believes that information about him contained in
BrokerCheck is inaccurate, FINRA staff will review the alleged
inaccuracy; if appropriate, contact the entity that reported the
information; and make a determination as to whether the information is
accurate or should be modified or removed from BrokerCheck.
Under proposed Rule 8312(e), in order to initiate a dispute
regarding the accuracy of information contained in BrokerCheck, an
``eligible party'' \17\ must submit a written notice to FINRA,
including all available supporting documentation.\18\ After receiving
the written notice, FINRA will determine whether the dispute is
eligible for investigation. Proposed Supplementary Material .02 to Rule
8312 provides examples of situations that are not eligible for
investigation, which include, but are not limited to, disputes that (i)
involve information previously disputed under the dispute resolution
process and that does not contain any new or additional evidence; (ii)
are brought by an individual or entity that is not an eligible party;
(iii) do not challenge the accuracy of information contained in a
BrokerCheck report but seek to explain information; and (iv) involve
information contained in the CRD that is not disclosed through
BrokerCheck. FINRA will presume that a dispute involving factual
information is eligible for investigation unless the facts and
circumstances suggest otherwise.\19\
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\17\ Only an ``eligible party'' would be able to dispute the
accuracy of information disclosed in that party's BrokerCheck
report. An ``eligible party'' includes any current member; any
former member, provided that the dispute is submitted by a natural
person who served as the former member's Chief Executive Officer,
Chief Financial Officer, Chief Operating Officer, Chief Legal
Officer or Chief Compliance Officer, or an individual with similar
status or function, as identified on Schedule A of Form BD at the
time the former member ceased being registered with FINRA; or any
associated person of a member or person formerly associated with a
member for whom a BrokerCheck report is available. See proposed
FINRA Rule 8312(e)(1)(A).
\18\ See proposed FINRA Rule 8312(e)(1)(B).
\19\ See proposed FINRA Rule 8312(e)(2)(A).
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Under the proposed rule, if FINRA determines that a dispute is
eligible for investigation, FINRA will add a general notation to the
eligible party's BrokerCheck report stating that the eligible party has
disputed certain information included in the report,\20\ which notation
will be removed when FINRA resolves the dispute. If FINRA determines
that a dispute is not eligible for investigation, it will notify the
eligible party in writing.\21\
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\20\ In circumstances where a dispute involves a court order to
expunge information from BrokerCheck, FINRA will prevent the
disputed information from being displayed via BrokerCheck while
FINRA evaluates the matter.
\21\ See proposed FINRA Rule 8312(e)(2)(C).
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When a dispute is deemed eligible for investigation, FINRA will
evaluate the written notice and supporting documentation and, if FINRA
determines that it is sufficient to update, modify or remove the
information that is the subject of the request, FINRA will make the
appropriate change. When the written notice and supporting
documentation do not include sufficient information upon which FINRA
can make a determination, FINRA will, under most circumstances, contact
the entity that reported the information to the CRD and request that
this reporting entity confirm the accuracy of the information. If the
reporting entity acknowledges that the information is not accurate,
FINRA will update, modify or remove the information, as appropriate,
based on the information provided by the reporting entity. If the
reporting entity verifies the accuracy of the information, or the
reporting entity no longer exists or is unable to verify the accuracy
of the information, FINRA would not change the information.\22\
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\22\ See proposed FINRA Rule 8312(e)(3)(A).
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Upon making its determination, FINRA will notify the eligible party
in writing that the investigation resulted in a determination that (i)
the information is inaccurate or not accurately presented and has been
updated, modified or deleted; (ii) the information is accurate in
content and presentation and no changes have been made; or (iii) the
accuracy of the information or its presentation could not be verified
and no changes have been made. A determination by FINRA regarding a
dispute, including whether to leave unchanged or to update, modify or
delete disputed information, is not subject to appeal.\23\
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\23\ See proposed FINRA Rule 8312(e)(3)(B) and (C).
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III. Summary of Comments and FINRA's Response
The Commission received fourteen comment letters on the proposed
rule change.\24\ Most comments focus on three issues: (i) The proposed
expanded disclosure of Historic Complaints through BrokerCheck and the
format of such disclosure; (ii) limitations on information proposed to
be disclosed via BrokerCheck; and (iii) the formalized process to
dispute and/or update information in BrokerCheck.
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\24\ See supra, note 4.
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A. Disclosure of Information in BrokerCheck
i. Expanded Disclosure of Historic Complaints
Eight comment letters generally support expanded disclosure through
BrokerCheck, including the proposal to expand disclosure of Historic
Complaints.\25\ Three comment letters generally oppose any expanded
disclosure of Historic Complaints.\26\
[[Page 41256]]
Three additional commenters take issue with the scope, time period and/
or method of disclosure of Historic Complaints as set forth in the
proposed rule change.\27\ Four commenters believe that disclosure of
all Historic Complaints will only serve to confuse investors.\28\ One
commenter suggests that customer complaints that are found to be
without merit and closed without compensation to the investor should be
subject to the current two-year disclosure period.\29\ One comment
letter argues that previously archived Historic Complaints should not
be made available via BrokerCheck, and that Historic Complaints should
only be reported under the ten-year disclosure period on a going
forward basis.\30\ Two commenters recommend that BrokerCheck only
display Historic Complaints on or after March 18, 2002, the reporting
date that the Investment Adviser Public Disclosure-Individual (``IAPD-
I'') database will use, as opposed to August 16, 1999, the date that
Web CRD was implemented.\31\
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\25\ See comment letters from Caruso, Cornell, NASAA, PIABA,
SIFMA, St. John's, Syracuse and Welker.
\26\ See comment letters from Cutter, MWA and Oster.
\27\ See comment letters from FSI, Janney and NAIBD.
\28\ See comment letters from Cutter, MWA, NAIBD and Oster. The
comment letter from Oster argues that disclosing only those Historic
Complaints made on or after August 16, 1999 will result in investors
receiving biased data and drawing inappropriate conclusions
therefrom.
\29\ See comment letter from Oster.
\30\ See comment letter from FSI.
\31\ See comment letters from FSI and NAIBD.
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FINRA believes that implementing the proposed rule change to expand
disclosure to include Historic Complaints will allow investors and
other users of BrokerCheck to view information they may consider
important and relevant.\32\ In response to commenters who raise the
above objections, FINRA notes that under the proposed rule change,
Historic Complaints will be displayed for ten years following the
termination of an individual's registration, rather than on a permanent
basis,\33\ as other commenters suggest.\34\ FINRA also notes that
Historic Complaints displayed on BrokerCheck will include information
regarding the Historic Complaint's disposition and the individual's
comments on the matter, if any.\35\ Additionally, FINRA states that it
is in the process of modifying the CRD system to allow firms to more
easily update or otherwise provide context to Historic Complaints.\36\
FINRA disagrees, therefore, that the expanded disclosure will confuse
investors and believes investors and other users of BrokerCheck are,
and in the future will be even better able to, put such complaints in
the appropriate context.\37\
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\32\ See Response Letter at 6.
\33\ Id.
\34\ See comment letters from Cutter and NAIBD.
\35\ See Response Letter at 6.
\36\ The Commission urges FINRA to ensure that firms do not,
under the guise of providing context to Historic Complaints, alter
the essence of the complaint.
\37\ See Response Letter at 6.
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FINRA disagrees with the suggestion that archived Historic
Complaints should not be made available via BrokerCheck, and that
Historic Complaints should only be reported under the ten-year
disclosure period on a going-forward basis. FINRA states that this
would result in far fewer Historic Complaints being disclosed than
would be under the proposal and would actually reduce the number of
Historic Complaints currently disclosed under FINRA Rule 8312.\38\
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\38\ See Response Letter at 5.
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With respect to timeframe, FINRA continues to believe that it
should disclose all Historic Complaints that became non-reportable
after implementation of Web CRD on August 16, 1999. FINRA believes it
is not necessary or desirable to harmonize the disclosure date for
Historic Complaints with the March 18, 2002 date used for complaint
disclosure in the IAPD-I database, as suggested by some commenters.\39\
FINRA notes that the two systems are separate, each system would note
its respective time frame, and using the 1999 date will provide more
information to investors than the 2002 date.\40\
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\39\ See comment letters from FSI and NAIBD.
\40\ See Response Letter at 4-5.
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Commenters also propose changes to the way Historic Complaints are
displayed on BrokerCheck and argue that additional disclosure in
BrokerCheck is necessary to clarify that the complaints are based on
allegations and have not been finally resolved.\41\ FINRA notes that
similar disclosure already exists on each BrokerCheck report.\42\ FINRA
agrees, however, that customer complaint information should be clearly
identifiable and states that it is in the process of revising the
customer dispute disclosure section of BrokerCheck to provide further
clarity, including adding a new heading to the report to identify
customer disputes that a firm reports as closed with no action,
withdrawn, dismissed or denied.\43\
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\41\ See comment letters from Cutter, FSI, Janney, MWA, NAIBD
and SIFMA.
\42\ See Response Letter at 3.
\43\ Id.
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ii. Expanded Disclosure, Generally
Six commenters argue that all of the information contained in
BrokerCheck regarding currently and formerly registered individuals
should be made available permanently; \44\ one commenter argues against
any expansion whatsoever.\45\ Those commenters in favor of expanding
disclosure to include all information available in BrokerCheck believe
that information should not be removed from BrokerCheck for formerly
associated persons after the ten-year disclosure period.\46\ Four
commenters argue that there is no compelling reason (including the
justification espoused by FINRA \47\) to distinguish between currently
and formerly registered persons with respect to the disclosure time
period in BrokerCheck.\48\ Two commenters believe that if FINRA will
not eliminate the disclosure discrepancies between currently and
formerly associated persons, at a minimum the information disclosed
permanently should be expanded to include additional categories.\49\
Three commenters believe that the information on BrokerCheck should be
expanded to include all information made available through State
securities regulators as well as in CRD.\50\
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\44\ See comment letters from Caruso, Cornell, NASAA, PIABA, St.
John's and Syracuse.
\45\ See comment letter from MWA.
\46\ Id.
\47\ FINRA stated that each of the disclosure events proposed to
be permanently included in BrokerCheck constitutes a final
disposition. See Notice at 8.
\48\ See comment letters from Caruso, PIABA, St. John's and
Syracuse.
\49\ See comment letter from NASAA, arguing that BrokerCheck
should include on a permanent basis information on felony charges,
misdemeanor charges involving an investment-related business, fraud,
wrongful taking of property, bribery, perjury, forgery and other
crimes of property, employment terminations relating to allegations
of violations of investment-related statutes or fraud, bankruptcy
and unsatisfied judgments or liens. See also comment letter from
Syracuse, arguing that disclosure should be expanded to permanently
include bankruptcy filings and misdemeanor charges relating to fraud
and other crimes bearing on a broker's veracity in financial and
business matters.
\50\ See comment letters from PIABA, St. John's and Syracuse.
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In response, FINRA notes that the events proposed to be permanently
disclosed in BrokerCheck pursuant to the proposed rule change
constitute final dispositions which, in most circumstances, have been
determined by an impartial fact finder after the subject person has
been given the opportunity to refute the allegations.\51\ Finally,
FINRA points out that much of the information proposed to be disclosed
pursuant to the proposed rule change is already publicly available
through other sources.\52\
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\51\ See Response Letter at 9. See also Notice at 8.
\52\ Id.
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[[Page 41257]]
C. Formalized Process To Dispute and/or Update Information in
BrokerCheck
All comment letters generally supported FINRA's proposed
codification of the process for disputing and updating information
displayed on BrokerCheck. Two comment letters request that a timeline
for submission and FINRA response be added to the rule, and these
commenters also request that FINRA allow firms or associated persons to
supplement descriptions of the incidents being reported.\53\ Another
commenter suggests that FINRA establish a standing national BrokerCheck
Record Review Committee (or delegate responsibility to FINRA's National
Adjudicatory Council) to investigate BrokerCheck inquiries and make
determinations with respect to eligibility and removal or modification
of information on BrokerCheck.\54\
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\53\ See comment letters from FSI and NAIBD. The FSI letter
suggests requiring FINRA to make an eligibility determination within
30 days of receipt of notice, while the NAIBD letter suggests
requiring FINRA to make a determination regarding update or removal
of the disputed information within 30 days of the submission of
supporting evidence.
\54\ See comment letter from SIFMA.
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FINRA represents that it will work diligently to process disputes
as expeditiously as possible, and believes that it will be able to make
determinations regarding disputes within a reasonable time frame.\55\
FINRA does not believe that mandating time limitations for submitting
and responding to disputes or establishing a committee to make
determinations regarding disputes is necessary.\56\ FINRA states that
most disputes regarding the accuracy of information in BrokerCheck are
straightforward and unambiguous and requiring a committee to review
such disputes would increase the processing time.\57\ Finally, FINRA
believes it would be redundant to expand the dispute process to allow
individuals to supplement descriptions on BrokerCheck, as the
opportunity to provide context to a disclosed matter on BrokerCheck is
already available to individuals.\58\
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\55\ See Response Letter at 7. FINRA notes, however, that in
certain circumstances the evaluation of a dispute will be outside of
its control.
\56\ Id.
\57\ Id.
\58\ See Response Letter at 8. FINRA points out that individuals
can provide context to a matter disclosed on BrokerCheck through the
submission of Forms U4 and U5. In a separate section of the Response
Letter, FINRA also notes that firms and individuals may add or
revise comments to, or update information regarding, Historic
Complaints disclosed on BrokerCheck. See Response Letter at 4.
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In response to a request for clarification regarding whether FINRA
rules prohibiting false filings would apply to the dispute process,\59\
FINRA notes that submissions by firms and individuals in connection
with the dispute process will be subject to FINRA rules.\60\
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\59\ See comment letter from NASAA.
\60\ See Response Letter at 7-8.
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IV. Discussion and Commission Findings
After carefully reviewing the proposed rule change, the comment
letters, and the Response Letter, the Commission finds that the
proposed rule change is consistent with the requirements of the Act and
the rules and regulations thereunder applicable to a national
securities association.\61\ In particular, the Commission finds that
the proposed rule change is consistent with Section 15A(b)(6) of the
Act,\62\ which requires, among other things, that FINRA's rules be
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to remove impediments
to and perfect the mechanism of a free and open market and a national
market system, and, in general, to protect investors and the public
interest.
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\61\ In approving this proposed rule change, the Commission has
considered the proposed rule change's impact on efficiency,
competition, and capital formation. See 15 U.S.C. 78c(f).
\62\ 15 U.S.C. 78o-3(b)(6).
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Specifically, the Commission believes that expanding the
information available through BrokerCheck about (i) persons who were
previously associated with a member within the last two to ten years
and (ii) formerly associated persons who were convicted of or pled
guilty or nolo contendere to a crime, were the subject of a civil
injunction in connection with investment-related activity or a civil
court finding of involvement in a violation of any investment-related
statute or regulation, or were named as a respondent or defendant in an
investment-related, consumer-initiated arbitration or civil law suit
which alleged that they were involved in a sales practice violation and
which resulted in an arbitration award or civil judgment against the
person, will help members of the public to protect themselves from
unscrupulous people. The Commission believes that such information is
relevant to investors and members of the public who wish to educate
themselves with respect to the professional history of a formerly
associated person. Formerly associated persons, although no longer in
the securities industry in a registered capacity, may work in other
investment-related industries, such as financial planning, or may seek
to attain other positions of trust with potential investors. Disclosure
of such person's record while he was in the securities industry via
BrokerCheck should help members of the public decide whether to rely on
his advice or expertise or do business with him. Currently, Web CRD
would indicate that no information is available for a formerly
associated person, which could lead a person making an inquiry about a
formerly associated person to conclude that the formerly associated
person had a clean record. Expanding the disclosure period for formerly
registered individuals to ten years, as well as expanding certain
information made available through BrokerCheck on a permanent basis,
will provide investors and other users of BrokerCheck information that
should be useful and relevant regarding such formerly registered
individuals' history. In addition, if registered persons are aware that
their CRD information will be available for a longer period of time, it
should provide an additional incentive to act consistent with industry
best practices.
The Commission also believes that the aspect of FINRA's proposal
that expands the information available through BrokerCheck regarding
Historic Complaints will further help members of the public to evaluate
an individual's record. The Commission believes that it is consistent
with the Act for FINRA to conclude that customer complaints should be
available to investors and members of the public who wish to educate
themselves with respect to the professional history of a current or
formerly associated person. Persons may take Historic Complaints filed
against an individual in the securities industry into account in
considering whether to do business with a current or former associated
person. The Commission agrees with FINRA and believes that potential
investors and members of the public who research a person with whom
they are considering doing business are capable of evaluating Historic
Complaints in the appropriate context.
Finally, the Commission believes that creating a formalized process
for disputing and/or updating the information displayed through
BrokerCheck is appropriate. The written guidelines proposed provide
administrative transparency and should help persons better understand
the procedure for disputing or updating information in BrokerCheck,
ultimately allowing for greater efficiency keeping information in
BrokerCheck accurate.
The Commission recognizes that the commenters make arguments with
respect to the usefulness of the
[[Page 41258]]
additional information they seek to have disclosed regarding registered
and formerly registered persons.\63\ The Commission recognizes that the
public's ability to access information, whether to inquire about a
registered person or a formerly associated person, may serve to protect
investors, the integrity of the marketplace, and the public interest.
The Commission urges FINRA to consider expanding the information as
suggested by the commenters. This information is available from the
individual States; however, it would be more accessible through
BrokerCheck. The Commission urges the public to utilize all sources of
information, particularly the databases of the State regulators, as
well as legal search engines and records searches, in conducting a
thorough search of any associated person's activities.
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\63\ See page 4, which notes information in CRD that will not be
made available as a result of this rule change.
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The Commission notes that FINRA stated it would continue to
evaluate all aspects of the BrokerCheck program to determine whether
future circumstances should lead to greater disclosure through
BrokerCheck.\64\ FINRA has a statutory obligation to make information
available to the public \65\ and, as stated in the past, the Commission
believes that FINRA should continuously strive to improve BrokerCheck
because it is a valuable tool for the public in deciding whether to
work with an industry member.\66\ The changes proposed in this filing
will enhance BrokerCheck by including more information that should
prove useful to the general public and by maintaining the accuracy of
such information. In addition, the disclosure of this additional
information may serve as a deterrent to questionable and fraudulent
activity.
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\64\ See Response Letter at 9.
\65\ See Section 15A(i) of the Act.
\66\ See, e.g., Securities Exchange Act Release No. 61002
(November 13, 2009), 74 FR 61193 (November 23, 2009) (SR-FINRA-2009-
050).
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For the reasons discussed above, the Commission finds that the rule
change is consistent with the Act.
V. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\67\ that the proposed rule change (SR-FINRA-2010-012), be, and
hereby is, approved.
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\67\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\68\
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\68\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
Exhibit A
List of Comment Letters Received for SR-FINRA-2010-012
1. Andrew Oster, President and CEO, Oster Financial Group, LLC, dated
May 4, 2010 (``Oster'').
2. Pamela Fritz, CSCP, AIRC, FFSI, FIC, Chief Compliance Officer, MWA
Financial Services, Inc., dated May 6, 2010 (``MWA'').
3. Lisa Roth, National Association of Independent Brokers-Dealers, Inc.
Member Advocacy Committee Chair, and CEO and COO, Keystone Capital
Corporation, dated May 6, 2010 (``NAIBD'').
4. Melanie Senter Lubin, Maryland Securities Commissioner and Chair,
North American Securities Administrators Association, Inc. CRD/IARD
Steering Committee, dated May 11, 2010 (``NASAA'').
5. Scott R. Shewan, President, Public Investors Arbitration Bar
Association, dated May 11, 2010 (``PIABA'').
6. Kelly R. Welker, Branch Manager, LPL Financial, dated May 12, 2010
(``LPL'').
7. Deborah Castiglioni, CEO and CCO, Cutter Company, Inc., dated May
12, 2010 (``Cutter'').
8. Lisa A. Catalano, Director, Associate Professor of Clinical Legal
Education and Christine Lazaro, Supervising Attorney, Securities
Arbitration Clinic, St. John's University School of Law, dated May 13,
2010 (``St. John's'').
9. William A. Jacobson, Esq., Associate Clinical Professor of Law,
Cornell Law School, and Director, Cornell Securities Law Clinic and
Adisada Dudic, Cornell Law School, 2011, dated May 13, 2010
(``Cornell'').
10. E. John Moloney, President and CEO, Moloney Securities Company,
Inc. and Chairman, Securities Industry and Financial Markets
Association Small Firms Committee, dated May 13, 2010 (``SIFMA'').
11. Joelle B. Franc, Student Attorney; Jonathan P. Terracciano, Student
Attorney; and Birgitta K. Siegel, Esq., Visiting Asst. Professor;
Securities Arbitration & Consumer Law Clinic, Syracuse University
College of Law, dated May 13, 2010 (``Syracuse'').
12. John M. Ivan, Senior Vice President, General Counsel, Janney
Montgomery Scott, LLC, dated May 14, 2010 (``Janney'').
13. Dale E. Brown, President and CEO, F.inancial Services Institute,
dated May 19, 2010 (``FSI'').
14. Steven B. Caruso, Maddox Hargett Caruso, P.C., dated May 25, 2010
(``Caruso'').
[FR Doc. 2010-17190 Filed 7-14-10; 8:45 am]
BILLING CODE 8010-01-P