April 17, 2009
I am writing in support of the provisions of SR-FINRA-2009-008 requiring increased reporting on Forms U4 and U5. I am a former registered representative and am currently an attorney who has represented broker-dealers, registered representatives and their customers in FINRA arbitrations for more than fifteen years. I have served as an NASD, now FINRA arbitrator for fifteen years. My experience during this time has repeatedly shown that disclosure of wrongful conduct by brokers is under reported by broker-dealers and FINRA. The proposed rule will be a step toward complete disclosure of complaints made by the investing public of those brokers who failed their customers.
Currently, a brokers wrongful conduct identified in a FINRA arbitration statement of claim is not required to be reported on his CRD unless the broker himself is named as a respondent. Not naming a broker as a respondent under FINRAs arbitration rules is the more prudent course because FINRA's arbitrator selection process provides for the selection of arbitrators to be unfairly weighted in favor of the respondent brokers and broker-dealers, if the broker is named personally. The broker's wrongful conduct which is the subject of the statement of claim and the basis for the employing broker-dealers liability goes unreported on his CRD, and unknown to the investing public who trust the CRD system.
When a statement of claim is filed the broker who is the subject of the statement of claim and the wrongful conduct alleged therein should be fully disclosed to the public through the CRD system. The withholding of this information from the CRD reporting system is itself a misrepresentation that should not continue. For the reasons set forth above, I support SR-FINRA-2009-008.
Very truly yours,
John S. Burke
Financial Fraud Attorney
Higgins Burke, P.C.