April 15, 2009
Deputy Secretary, Securities and Exchange Commission 100 F Street, NE Washington, DC 20549
I have worked in the Financial Services industry for over 20 years and believe, wholeheartedly, in punishing those agents and representatives that engage in fraudulent or misleading practices. They should be censured and forced to disclose improper practices that they have engaged in. It is unfortunate that the actions of a few always affect the perception of the whole.
Having said that, I have concerns regarding certain aspects of FINRA's proposal to revise Forms U4 and U5. While certain parts of the FINRA proposal are warranted and appropriate, my specific concern is with that part of the proposal that would revise Forms U4 and U5 to essentially 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.
It appears to me that merely being mentioned in the body of a complaint (whether one was named as a party or not) would require notification via the U4 or U5.
While I'm all for penalizing those Reps engaging in improper activites, I would hate to see honest, hard-working Reps be branded "guilty before charged".
The SEC should not allow someone's reputation to be irreparably damaged by unproven claims or allegations made in a lawsuit or arbitration proceeding in which the individual has not been named as a party.
Furthermore, a named party to a lawsuit or arbitration has an opportunity to refute the allegations against him and "clear his name." Someone who has not been named as a party in a lawsuit or arbitration does not have this same opportunity or ability, and any allegations made against him will likely go unanswered and unchallenged.
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 considering my comments.
Robert T. MacDonald