April 8, 2009
Am writing to give input to FINRA`s proposal to revise Forms U4 and U5. I want advisors who perform misdeeds out of the business. And financial advisors must rely upon the good will and relationship established with clients and the reputation in the community. Good advisors desire to build a successful business and want to make the achievement of clients` investment objectives the primary goal. However, this proposal could mistakenly undermine efforts to build a successful business by allowing a reputation to be harmed by unproven allegations contained in an arbitration or civil litigation claim in which the individual is not a named party. This is absolutely unacceptable if one believes in the arbitration system.
As a simple matter of fairness, financial advisors should be allowed a meaningful opportunity to respond to unadjudicated allegations before having their reputation sullied through the reporting of these matters to the Central Registration Depository and made available to the public through FINRA`s BrokerCheck program. But under the proposal, "yes" answers to Questions 14I(4) and (5) on Form U4 and Questions 7E(4) and (5) on Form U5 would be reported to the public and securities regulators whether or not they have merit.
I am aware that there are other situations under the current rules that require mere allegations contained in written customer complaints to be shared with the public and the regulators. However, I vigorously disagree with FINRA`s conclusion that this injustice should be extended to arbitrations and litigation that fail to name the financial advisor as a party! Instead, I believe FINRA should propose to end the reporting of all unsubstantiated claims of wrongdoing to the public and allow honest and decent financial advisors to retain their hard-earned reputations.
Therefore, I urge you to reject FINRA`s proposal to add Questions 14I(4) and (5) to Form U4 and Questions 7E(4) and (5) to Form U5. Unsubstantiated accusations can unfairly impair the reputations of innocent people.
Thank you for considering my comments.
Sincerely,
Mr John Dardis
Division Manager
NEXT Financial Group