April 15, 2009
Florence Harmon
Deputy Secretary, Securities and Exchange Commission 100 F Street, NE Washington, DC 20549
Florence Harmon:
I am an insurance agent and registered representative with 12 years' experience in this industry. I am writing with regard to FINRA's proposed changes to Forms U4 and U5.
I understand that the changes would require a registered rep to disclose on these forms any time an arbritration claim or lawsuit makes allegations of sales practice violations against the rep, whether or not the rep is actually named as a party in the legal action. This would mean that any time my name is mentioned in such an action I would have to report it, whether or not there was enough of a case against me to actually make me a party.
I have two serious objections to this proposal. First, how am I to know that I have been mentioned during this action? Unless I'm a named party, I'm not likely to be notified. And that would open me to a FINRA violation.
Second, these forms are made public by means of the BrokerCheck program. Members of the general public seeing these disclosures would conclude that the rep was involved in sales practice violations, even though the rep had not been directly involved and was never given the opportunity to present his or her own side of the story.
While I support public disclosure of wrongdoing, I feel that these proposed rule changes would be a significant risk to my business and livelihood whether or not I was one of the wrongdoers.
I therefore request that you not approve that part of FINRA's proposal that would require the reporting of allegations of sales practice violations made against a registered person that are contained in the body of an arbitration claim or lawsuit in which that person is not named as a party.
Thank you for your attention.
Sincerely,
Norajane McIntyre