April 16, 2009
I am an attorney and have represented investors in claims against the brokerage industry for more than 30 years. I also serve as a Finra arbitrator.
I support the proposed amendment and in particular the provisions that require the reporting of complaints against brokers who are identified in an arbitration claim but not named as a party.
There is no logical reason to allow these complaints to go unreported where a similar complaint mailed to the firm would have to be reported, as would a complaint in an arbitration claim where the broker is named as a party.
The existing Finra policy has resulted in omissions in the CRD and has misled investors as to the disciplinary history of brokers whose complaints have gone unreported.
Whether a broker is named as a party in an arbitration is typically a matter of strategy on the part of the claimant's attorney. Recognizing that most arbitrations settle, many attornies believe cases in which a broker is named are more readily resolved by settlement. Not naming a broker may be a function of other strategies. The fact that the broker is identified as a wrongdoer in the body of the claim should be the sole test for reporting, since it is then clear that the broker is a named wrongdoer.
In the interest of investor protection, the rule should be approved.
Laurence S. Schultz