April 16, 2009
Deputy Secretary, Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
As an insurance and finanancial advisor who has provided service and support to my clients as well as clients of other financial advisors for whom I've worked. I am writing to express the 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. My concern is a person, such as myself, who has been hired to help service accounts, would have to report allegations of sales practice complaints made against others if that person was either named in or could be identified from the body of the claim, even if the person is not a party to the lawsuit or arbitration proceeding.
I am becoming aware first hand of how much here say and accusations can soil the reputation of an innocent party. I would urge you to oppose the imposition of this "guilty before charged" standard which could result in my reputation and livelihood being irreparably damaged by unsubstantiated claims made in a proceeding in which I have not been named as a defendant or respondent. While I agree that people who engage in unscrupulous or misleading sales practices should be aggressively prosecuted and sanctioned, the SEC should not allow someone's reputation to be irreparably damaged by unproven claims. A named party to a lawsuit or arbitration has an opportunity to refute the allegations against him or her and "clear his name." As a "named party" in a lawsuit or arbitration, that person does not have this same opportunity. Any allegations made against him or her will likely go unanswered and unchallenged.
After more than 20 years of experience in insurance and 10+ years working in the investment environment, I believe such changes could compromise the quality of sales and service support to consumers by scaring away good people. I know many reputable, licensed, registerd individuals who work in support of others as assistants and junior partners who could be negatively impacted by such changes for only being "at the wrong place at the wrong time". This measure does not speak to fairness and I would strongly encourage you to 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. I appreciate your consideration of my thoughts and comments. Thank you.