April 10, 2009
I have serious concerns about FINRA`s proposal to revise Forms U4 and U5.
I`m sure all of us in the industry agree with the requirements for the ongoing training in which we must participate and the close supervision to which we are subject. We realize this is not only for the benefit of our clients but ourselves. We become better advisors and representatives and our clients receive more professional service in our attemps to securetheir financial goals.
Your proposal as it currently stands, will detrimental to my efforts to build successful businesses by allowing my reputation to be harmed by unproven allegations contained in an arbitration or civil litigation claim in which I not a named party. This is absolutely unacceptable.
As matter of fairness and probably legal standing, a financial advisor should be allowed the opportunity to respond to an unadjudicated allegation before having their reputation damaged 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. Thank you for considering my comments.
Sincerely,Mr William Grace