April 16, 2009
Deputy Secretary, Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
I am an insurance professional and registered representative writing to express the significant concerns I have 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. Generally, unless a person is named in a lawsuit or arbitration, they are not formally served a complaint. Therefore, it would be possible for a registered representative to not know they were mentioned in an action.
I just don't understand how the SEC could require someone to disclose an allegation with no opportunity to dispute any allegation. This rule would allow clients to use the mention of an advisor's name in any action as a threat if they request unethical behavior be performed on their behalf. Any person should have the due process of defending false allegations and financial professionals are no different. There should be a zero tolerance in the financial services industry for unethical and illegal behavior, but there should also be an opportunity to dispute any allegations for the accused.
Please do not approve this proposal unless a person is actually named in an action. Any other method would be contrary to everything the American judicial systems stands for and could ruin a person's reputation with no repercussions to the accuser.
People should be properly notified of an action and have an opportunity to offer a defense of the alleged actions.
Thank you for your consideration.