April 14, 2009
I am an attorney who, for many years, has represented the interests of public customers in disputes with the securities industry. I write in support of the proposed rule relating to changes in Forms U4 and U5. This proposal would close a significant loop hole in reporting requirements that has worked to the detriment of retail investors by perpetuating a practice of ignoring complaints lodged against stockbrokers.
At present, if an individual stockbroker is not named as a respondent in a statement of claim his/her employing broker/dealer is not required to report the brokers involvement to the CRD system. This is true even though the broker is identified by name and CRD number in the body of the statement of claim and even though the complained of sales practice violations committed by the broker are clearly set forth. Given significant strategic reasons why the decision not to name a broker is made (having nothing to do with culpability), the current system provides cover for employing firms who prefer to keep the investing public in the dark.
There can be no more important financial decision than that associated with the selecton (or continued employment) of a stockbroker. The public is entitled to know if that person has a history of customer complaints. To filter the access to that information under the guise of "privacy" or by characterizing it as "unajudicated allegations" is nonesense and is but another example of protecting problem brokers at the expense of Main Street investors.
I urge the prompt approval of this proposal.